President Trump unveiled plans Thursday to slap hefty tariffs on global imports of steel and aluminum, catching much of his administration by surprise, sending stocks plunging and sparking widespread fears that he was leading the United States into an ugly trade war with China as well as key American allies.

Trump said he would sign an order next week to impose 25% tariffs on steel imports and 10% duties on aluminum, using his authority under an obscure trade law provision that permits the president to take sweeping measures in the name of national security.

Trump has long been a critic of U.S. trade policies, and he was elected partly on the promise to revamp the way Washington does business with the rest of the world. On Thursday, Trump assured U.S. manufacturers that they will “have protection for a long time .… You’ll have to regrow your industries. That’s all I’m asking.”

For months, administration officials with less nationalistic views on trade, such as chief economic advisor Gary Cohn, have tried to dissuade Trump from imposing broad tariffs in response to America’s big trade deficit and what the president views as the world taking unfair advantage of the U.S. The shift was reflected in the recent rise in influence of more hawkish advisors who share Trump’s skepticism of trade, including Peter Navarro.


Trump’s declaration came after a chaotic day in which administration officials hastily summoned steel executives, first said the president would take action, then said he would wait. In the end, he made the announcement in an almost off-the-cuff manner, responding to a shouted question from reporters at a meeting with steel industry officials.

Stocks sank sharply after his remarks, as investors, already nervous about rising inflation and interest rates, began to worry that tariffs would push up prices of goods and lead to tit-for-tat measures from China and others. The Dow Jones industrial average ended down 420 points.

Details of the tariffs, however, were unclear, including whether they would apply to all countries, or just primary targets, such as China. White House Press Secretary Sarah Huckabee Sanders said only that the details would be revealed next week.

Trump’s impromptu announcement rattled previously scheduled talks Thursday in Washington between administration officials and a Chinese delegation led by Liu He, the Communist Party’s most powerful economic official, who arrived this week in a bid to strike a deal and head off a trade war. If preliminary talks had gone well Thursday, American officials were prepared to bring Liu to meet Trump in person, a White House official said, speaking on condition of anonymity to describe internal plans.


Chinese President Xi Jinping dispatched the trade negotiators in advance of a major Communist Party gathering in March, and after another high-ranking party official made a rushed visit to Washington in early February to meet with Trump and try to smooth over rising tensions over trade and China’s relationship with North Korea.

It was unclear whether Trump — who pushed the White House to make the announcement Thursday — was trying to send a deliberate message to China. Either way, it will only further rile Beijing and make retaliatory action a near certainty.

The president has until mid-April to issue his decision on steel and aluminum tariffs under the law the administration is using to impose the punitive measures. Officials are invoking a rarely used and controversial provision that grants the president wide discretion to restrict imports on the grounds of national security.

“With no legal requirement to announce tariffs this week or next, it seems like a slap in the face,” said David Loevinger, an analyst for TCW Emerging Markets Group in Los Angeles and former senior Treasury Department official for China affairs.


Administration officials gave no reason for the back and forth, but some analysts speculated that the haphazardness reflected “internal chaos” in the White House. Trump fueled the confusion by tweeting early Thursday: “Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!”

The president has been weighing various options to limit imported aluminum and steel, which accounts for about one-fourth of U.S. consumption and has left domestic mills running well below capacity. Imposing tariffs or quotas would represent Trump’s most consequential action to date to overhaul U.S. trade practices.

Domestic producers, along with unions and lawmakers in steel-producing states, have been pressuring Trump to act swiftly. “We’re counting on the administration to fulfill the promises it’s made,” John Ferriola, chief executive of the steelmaker Nucor, said in a televised appearance with Trump on Thursday.

Many other businesses and groups, as well as some administration officials and congressional Republicans, have sought to restrain the president, arguing that such action would hurt some American companies and consumers of steel, and possibly the U.S. economy, and is certain to raise the ire of allies and adversaries alike.


It will open a Pandora’s box, said Loevinger. Other countries also will be tempted to take protectionist actions based on national security, he said, and other U.S. industries could seek relief from import competition for that same reason. “It’s a real slippery slope,” he said.

“I think China is going to take it badly,” said Matthew Goodman, a senior adviser for Asian economics at the Center for Strategic and International Studies. “The actual impact may not be huge, but the symbolic impact is quite significant.… The Chinese are going to feel the need to respond with some sort of retaliation.”

The Chinese Embassy in Washington had no immediate comment on the planned tariffs. Analysts expect Beijing will not overreact but nonetheless will target U.S. agricultural exports if the tariffs are implemented — products like soybeans, whose farmers are a politically powerful lobby in Congress and are likely to put pressure on the administration.

Earlier this week European Union trade ministers said they would respond with countermeasures to U.S. tariffs on metals. A representative of Japan’s steel industry called the 25% steel tariff “ill advised and naive.”


And Canada, which by far is the largest exporter of steel and aluminum to the United States, said Thursday that it viewed as “absolutely unacceptable” any trade limits on the Canadian metals. “Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” said Foreign Minister Chrystia Freeland, who has also contended with the Trump administration’s ongoing efforts to renegotiate the North American Free Trade Agreement.

At home, news of the tariffs scrambled partisan politics, with leading Democratic lawmakers praising Trump’s plans to get tough on trade and Republicans warning of severe consequences. “Tariffs on steel and aluminum are a tax hike the American people don’t need and can’t afford,” said Senate Finance Committee Chairman Orrin G. Hatch (R-Utah).

After launching an investigation last spring, the Commerce Department concluded that steel imports were “in such quantities” and “under such circumstances” that they threatened to harm national security, clearing the way for Trump to implement sanctions. The Commerce report urged Trump to consider across-the-board tariffs or targeted penalties on select countries, as well as quotas, or a combination of these.

Analysts and officials from other nations have questioned such a broad reading of “national security,” given that U.S. steelmakers produce more than what’s needed for the Defense Department and its various military programs. Any sweeping new tariffs are expected to be contested at the World Trade Organization.


The Trump administration has argued that the country must ensure it has ample U.S. suppliers of steel to safeguard the nation’s economic security, which encompasses infrastructure such as energy generation, water systems and transportation networks. Commerce Secretary Wilbur Ross has said that the United States has just one domestic maker of transformers that are essential for the country’s electrical grid.

China’s exports of steel to the United States were a mere 2.5% of the total last year, thanks to a host of previously imposed duties for “dumping” and illegal subsidies.

However, China would be a primary target of any Trump action as some Chinese-produced steel is thought to be shipped to America through other countries. Massive overproduction of the metal at Chinese mills is widely blamed for depressed global steel prices.

“A remedy, whether tariffs or quotas or a combination of the two, is one piece of the puzzle,” said Scott Paul, president of the Alliance for American Manufacturing, which has advocated for strong relief for domestic steel producers. “Ultimately, the administration needs to work to squeeze out overcapacity in the steel industry globally.”


Recently, Trump approved hefty duties on solar panels imported from China, and his administration also has undertaken various other investigations of and actions on Chinese goods and economic behavior, including theft of intellectual property and policies forcing U.S. companies in China to share technology secrets.

Brian Bennett in Washington contributed to this report.

don.lee@latimes.com

Follow me at @dleelatimes


UPDATES:

3:15 p.m.: This article was updated with reaction from Canada, Sen. Hatch and others.

11:30 a.m.: This article was updated with reaction from the stock market, Japanese steel makers and others.


9:55 a.m.: This article was updated with Trump announcing plans to impose tariffs.

9:25 a.m.: This article was updated with the White House canceling the planned announcement on tariffs.

This article was originally published at 6:20 a.m.