The Department of Trade and Industry (DTI) says it is studying US President Donald Trump’s proclamations to impose a new 10% tariff on aluminium products and a new 25% tariff on steel products from March 23. However, the department also confirmed that it would be making a formal submission to the US on the tariffs as provided for in the proclamations.

The proclamations, signed by Trump on March 8, state that Commerce Secretary Wilbur Ross would, within 10 days, issue procedures for the requests for exclusion. Mexico and Canada had already been excluded from the tariffs, with the proviso that the US government was satisfied with the outcome of talks on a proposed new North American Free Trade Agreement.

However, the proclamations make further exclusions possible, where it could be shown that there is a lack of sufficient US production capacity of comparable products, or in instances where exclusions would be in the interest of national security.

Bloomberg reports that Trump has invited “any country with which we have a security relationship” to discuss “alternative ways” to address the security risks of steel and aluminium imports.

The aluminium products affected include: unwrought aluminium; bars, rods, and profiles; wire; plate, sheet, strip and foil; tubes and pipes and tube and pipe fitting; as well as castings and forgings.

The steel products affected are defined at the Harmonised Tariff Schedule six-digit level as:  7206.10 through 7216.50; 7216.99 through 7301.10; 7302.10, 7302.40 through 7302.90; and 7304.10 through 7306.90.

The DTI said in a statement that South Africa’s steel exports to the US amounted to $950-million in 2017 and accounted for 1.4% of US global imports, while the country’s aluminium exports were valued at $375-million, accounting for 1.6% of US imports.

“It is clear that South Africa’s exports do not impose a threat to US industry and jobs,” the department said in a statement, noting that some of the products were employed by American companies in further manufacturing processes.

“The proclamations make a provision for any country with which the US has a security relationship to discuss with the US alternative ways to address the threatened impairment of the national security caused by imports from that country.

“Should the US and that country arrive at a satisfactory alternative means to address the threat to the national security, the US President may remove or modify the restriction on steel articles imports from that country and, if necessary, make any corresponding adjustments to the tariff as it applies to other countries as the national security interests require,” the DTI noted in its statement.

In response to the tariff threat, JSE-listed steel producer ArcelorMittal South Africa (AMSA) highlighted that it dispatched only 70 000 t to the US in 2017, representing less than 2% of the company’s total sales of over 4-million tons. AMSA also stressed that its primary market remained South Africa, while its export focus remained the “Africa overland” market.

However, the impact was not limited to AMSA, with analysis by the South African Iron and Steel Institute (Saisi) cautioning that increased US protection could have negative employment and output impacts.

Saisi said that, while the South African import contribution represented a “miniscule portion” of total US steel demand of 105-million tons, the figure still made up around 5% of South African production. Losing the US market could, thus, put 300 000 t of steel production at risk, along with some 7 500 jobs in the steel and manufacturing supply chain.

Resources group South 32, which produces aluminium in South Africa and Mozambique, said its diversified portfolio positioned it well to manage any potential impact. The group told Engineering News Online that the US contribution remained small “as a share of total sales across our diversified book selling into the Americas, Europe, Africa and Asia”.

South African aluminium products manufacturer Hulamin was also paying close attention to developments, with the US market currently representing around 20% of its yearly sales by value. American customers buy the company’s heat-treated plate, foil, flat sheet and coils, can stock and tread plates. Nevertheless, these sales represented less than 2% of US aluminium product imports.

The DTI promised that it was “fully engaged with the matter” and said it would continue to have discussions with the US on the issue. However, the department confirmed that, if no alternative arrangement was agreed, the tariff would affect South African exporters from March 23.