Financial Times reported that Tokyo has opted for a low key response to Donald Trump’s tariffs on steel because Japanese mills believe US rivals cannot make the high-grade metals they export.
The lack of retaliation threats from Japan, despite anger and frustration at the US president’s decision to target a close ally, reflects confidence that many of the country’s steel exports can win product-by-product exemptions from the tariffs. Japan’s calculated response highlights its determination to keep good relations with Mr Trump and the difficulty of using tariffs as a tool to force trade concessions when so many US industries rely on imports.
One official at a large Japanese steelmaker, who argued it would take years for US manufacturers to win customer certification for the speciality steels used in oil and automobiles, even if they invested in technology said that “The US steel industry is quite technologically backwards.”
According to industry officials, out of 2 million tonnes of Japanese steel exported to the US, about 190,000 tonnes are high-grade piping used deep underground in oil wells. Another 320,000 tonnes are speciality steels for the automotive industry and 170,000 tonnes are hard-wearing railway track. Much is supplied under long-term contracts with customers such as leading oil companies or Japanese carmakers with plants in the US. The applications are often critical to safety or performance.
Mr Trump last month ordered punitive tariffs of 25 per cent on steel and 10 per cent on aluminium, claiming that imports were a threat to US national security. He later announced temporary exemptions for Canada, Mexico, Australia, Argentina, Brazil, South Korea and the EU but Japan was not on the list. That threatens roughly USD 2 billion in Japanese exports from companies such as Nippon Steel & Sumitomo Metal, JFE Holdings and Kobe Steel.
Source : Financial Times