WASHINGTON – The Trump administration is set to miss a self-imposed Friday deadline for concluding a major probe of steel imports, a delay officials said was driven by unanticipated complexities in engineering such a big shift in U.S. trade policy.
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The administration has faced challenges in implementing its "America First" policy amid resistance from lawmakers and many business groups who worry that new curbs on steel imports could drive up costs for American manufacturers and spark retaliation from trading partners.
President Donald Trump and Commerce Secretary Wilbur Ross had set the end of June deadline for publishing a report on the national security implications of steel imports. The report is expected to be used as ammunition for potential tariffs or other barriers on imported steel.
"There's a just a lot of analysis. It's a bigger deal than they originally thought," said an industry expert familiar with the administration's deliberations.
The delay follows struggles that the administration has faced pushing other policy priorities through the legislative and bureaucratic complications of Washington. People familiar with the deliberations said that the process was also slowed by the White House focus this week on other major issues, like health care, as well as still-thin staffing at major agencies.
Officials said Mr. Trump still planned to meet his promise to impose new steel import curbs, just that the timetable had slipped.
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"I'm not sure when the Commerce Department will release its final report on the steel industry," said Gary Cohn, a top Trump economic adviser, at a briefing Thursday. "They've been working on it for quite some period of time. It's in draft form or near-final form."
Mr. Trump said in late May in a tweet that the report would be issued in June and that he would take "major action if necessary." In an early June Ohio rally, he said that the move will come "very soon" and "the steel folks are going to be very happy."
Mr. Ross said last month at a hearing on the steel matter that "our hope would be to complete the report by the end of June."
The delay in finishing the investigation is driven by unexpected difficulties the administration faces in hammering out the practical details of putting barriers on steel over national security concerns, the people said. The Commerce Department is just one agency working on the final report, according to people familiar with the process.
The report may not be released until mid-July, after Mr. Trump travels to Hamburg, Germany, for a summit of the Group of 20 leading global economies, the advisers said. Mr. Trump is expected to face questions about the steel tariffs during the trip and may face international criticism, or even retaliation, if he imposes tariffs or quotas.
"We will use that as an opportunity to talk with many of our trading partners around the world, to talk about what's going on in steel," said Mr. Cohn, who's seen as representing the pro-business side of the administration.
The prospect of American steel tariffs or quotas has caused particular agitation in the European Union, which ranks after Canada as the largest steel exporter to the U.S. -- especially since some administration officials have hinted that Canada may be exempted from any limits.
"We are very much concerned that that kind of decisions would be damaging for France and Europe," France's economy minister, Bruno Le Maire, said in an interview with The Wall Street Journal Thursday. "We are an open economy, and it would be very difficult for us to understand such a decision."
Europeans say American barriers on their products won't solve what most experts say is the biggest problem hanging over the global steel industry: massive oversupply from China, which accounts for about half of all steel production capacity world-wide. The U.S. already imposes duties on many types of Chinese steel due to alleged dumping and subsidies, so China currently sells very little directly to the U.S., and thus wouldn't be hit directly by new restraints.
The tension between Europe and the U.S. was on display Tuesday, when Mr. Ross canceled a planned trip to Berlin to speak to German officials, then spoke instead via live stream. He was cut off partway through his remarks, which lasted longer than scheduled. German Chancellor Angela Merkel followed by telling the crowd: "Those who believe they can solve the problems of this world with isolationism and protectionism are making a huge error."
Mr. Trump is also likely to get resistance to the potential limits from South Korean President Moon Jae-in, visiting Washington this week. South Korea ranks just behind Europe in steel exports to the U.S.
The steel debate pits different parts of the administration against each other, with "economic nationalists" supporting barriers to protect American industry and bring back manufacturing jobs, and the pro-business wing defending free trade to support international business activity and broad economic growth.
Last week a number of influential Democratic and Republican lawmakers warned about the dangers of imposing barriers to steel imports, saying they could rises prices and hurt other manufacturers that use imported steel. "Done hastily, we raise costs and prove to our partners that we aren't reliable," Rep. Kevin Brady, the Texas Republican who chairs the House committee that oversees trade policy, told U.S. trade representative Robert Lighthizer at a hearing.
Business groups and lawmakers are pushing for mechanisms to exclude types of steel not made in the U.S. in sufficient quantities. Some experts following the talks expect Mexico and Canada to be excluded as the Trump administration is seeking to modernize the North American Free Trade Agreement, and lawmakers have pushed for other allies including the U.K. to be excluded as well from tariffs or quotas.
The Section 232 legal provision allows the president to impose broad tariffs based on an analysis of the national security risks of imported goods. Mr. Trump said he would dust off that provision and other ones to defend American manufacturing from what he sees as unfair competition from China and other countries.
Messrs. Ross and Lighthizer, who previously worked with steelmakers, have argued that a healthy industry is critical to national security. Low-cost imports put pressure on mills around the country. The industry blames China for production levels that cheapen prices around the world.
But critics of the Section 232 process say the U.S. defense industry represents only a tiny fraction of the country's steel consumption. They say the process could open up the door for other countries to block imports on national security grounds.
--Bertrand Benoit in Berlin and Mike Bird in New York contributed to this article.
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(END) Dow Jones Newswires
June 29, 2017 18:42 ET (22:42 GMT)