G-20 Tensions Simmer Over US Tariff Plan on Steel

Markets Shrug as Trump Targets China in Tweets

French President Emmanuel Macron challenged Trump's view that the U.S.is losing out on trade, the official said. His threats to do so, more than established trade norms, may be the force that pushes the G-20 toward its own promise of less protectionism.

The Italian prime minister, Paolo Gentiloni, warned that new protectionist trade measures could bring "contagion" that would slow the growth of the world economy.

"The United States made some of the worst Trade Deals in world history". "Why should we continue these deals with countries that do not help us?" The White House is considering using this rationale to impose new restrictions, either by imposing tariffs or quotas, or a combination of the two.

US steel prices are firm so far this week, holding onto their value despite the passing of the "deadline" for the Commerce Department's Section 232 investigation results last Friday.

While the expected Section 232 deadline has passed, American steel prices are holding steady.

As banker Credit Suisse explained back in May, the Trump administration is now conducting a "national security investigation" under Section 232 of the Trade Expansion Act of 1962 into whether foreign-made steel is being dumped on the U.S. If it finds that foreign companies are abusing the U.S. market, the Trump administration could impose tariffs on and limit imports of foreign-made steel.

In advance of the G-20 summit, Merkel and Trump discussed "global steel overcapacity" during a phone call on Monday. "It's not just the pricing, it's not just employment", Trump said in April at a ceremony ordering the review. Obama's tariffs targeted Chinese firms for illegally dumping specific kinds of steel into U.S. markets. For the second time in just over two weeks, he indicated his hopes for a good relationship with China may have dissipated. In fact, of the top 10 foreign steel suppliers, of which Canada is the largest, six are tied to the United States through NATO, NAFTA or bilateral defense treaties; two others, Taiwan and Brazil, are old USA friends.

Trump attacked China for ramping up trade with North Korea in a Wednesday tweet, saying that "trade between China and North Korea grew nearly 40% in the first quarter".

But the group also said that North Korea's exports of coal to China remained frozen.

However, a report authored by Chad Brown of the Peterson Institute for International Economics (PIIE) found that the measures would disproportionately hurt countries such as Canada, Mexico, Japan, Germany and South Korea - all of whom are important allies of the US.

Merkel "certainly will have to use all of her diplomatic skill to make headway on these hard questions", Juncker said Thursday evening, German Foreign Minister Sigmar Gabriel sounded a warning on the US approach to trade issues.

A number of trade experts said it remains unclear whether Trump is simply threatening tariffs as a way to lure other countries to offer him concessions, or if he will follow through on new restrictions. He has repeatedly criticized and is now looking to withdraw or renegotiate NAFTA - the North American Free Trade Alliance.

G-20 meetings, which are held once a year in a rotation of countries, typically end with a joint statement from every nation about a range of issues that can include economic policy, worldwide assistance and security.

Eight U.S. -based smelters have either closed or curbed production since 2015, the Commerce Department says.

On Friday, leaders from the world's biggest economies will meet at the G20 summit in Hamburg, Germany, where many of those public spats could be rekindled.

The deal suggests that if Trump pulls the country back from trade deals - as he and Congress did when they sundered a trade pact between the United States, Japan and other countries on both sides of the Pacific - the rest of the world will likely look elsewhere.

"We will keep markets open, noting the importance of reciprocal and mutually advantageous trade and investment frameworks", the final communique will say, according to the officials.

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