Ministers Say US Steel Tariffs Will Upset Global Economy; Indonesia to Wait and See

US President Donald Trump's planned tariffs on steel and aluminum will harm the global economy, Indonesian ministers said on Tuesday (06/03). (Reuters Photo)

By : Adinda Normala | on 10:07 PM March 06, 2018
Category : Business

Jakarta. United States President Donald Trump's planned tariffs on steel and aluminum will disturb the global economy, Indonesian ministers said on Tuesday (06/03), as they postponed concrete decisions until next week to monitor reactions in international markets.

Last week, Trump announced his administration's plan to impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, on the grounds that imports endanger American national security by harming domestic production. The announcement raised fears of a trade war with other big economies.

"When there is a war of tariffs, history shows us that it has a negative impact on the world economy; it has happened before, several times," Finance Minister Sri Mulyani Indrawati told reporters in Jakarta.

"But we'll see [in the following week], as the proposal is still being debated by President Trump, the Congress and the Senate," she added.

Trump said the new duties will be announced next week, but White House officials later added that some details still needed to be ironed out.

US House Speaker Paul Ryan from the Republican Party has pleaded with Trump to withdraw the plan, but the president told reporters yesterday: "We're not backing down."

Coordinating Economic Affairs Minister Darmin Nasution said he will arrange a meeting with the Ministry of Trade and the Ministry of Industry to mitigate the risk of the new tariffs, if they are imposed.

"It is too early to react … But we will watch how it all develops," he said, adding that the government will take into account China's and European Union's reactions to the announcement.

According to data from the European Automobile Manufacturers' Association (ACEA), around 10 percent of trade between the US and the EU is driven by the automobile industry.

While only 2 percent of steel imports to the US comes from China, its massive steel industry's expansion has resulted in lower prices of the alloy.

Darmin said the new US tariffs will cause a flood of Chinese steel products, which having nowhere else to go will enter other countries, including Indonesia.

According to data from the World Steel Association, China was the largest steel producer in in 2017, with 831.7 million metric tons, followed by the EU with 168.7 million tons and the US with 81.6 million tons. Meanwhile, Indonesia produced only 4.8 million tons of the alloy.

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