The Trump administration announced Thursday it will impose tariffs on steel and aluminum imports from Europe, Mexico and Canada, a move that ratchets up trade disputes with some of Louisiana’s top trading partners.
The move drew swift vows of retaliation from key allies, inflamed trade tensions and sent stock markets sinking.
The countries in turn quickly announced retaliatory tariffs on U.S.-made goods, most of which spared some of Louisiana’s biggest agriculture and other export products. The countries collectively represent a significant chunk of Louisiana’s exports. Mexico, the Netherlands and Canada are among the five biggest export destinations for goods originating in Louisiana, according to U.S. Census Bureau figures. Canada is also the fifth-largest source of Louisiana imports.
One product on the E.U. list of retaliatory tariffs is rice, noted Jerry Hingle, president and CEO of International Trade Associates, but that only represents $14 million in exports from Louisiana, which is relatively small.
There will also be a lengthy appeals process, Hingle said.
“From a Louisiana perspective I’m not hitting the panic button yet,” he said.
Still, Louisiana, a state heavily reliant on trade, is beset on many sides by the escalating trade disputes. Between the state’s waterways, agriculture and chemical exports, and industries relying on cheap steel and aluminum for massive petrochemical and LNG plants, trade economists say the Bayou State is in a delicate position. Metal futures are already driving up prices for industry, Hingle noted.
The Port of New Orleans could soon feel the effects of the new tariffs. Spain and Italy were among the top 10 largest importers of steel to the port in 2016, and 11 other European Union countries send steel through the port. Plus, a range of products made in many other states flow through Louisiana’s ports, meaning retaliatory tariffs could tamp down that flow of goods.
Canada was the second-largest importer of aluminum to the Port of New Orleans in 2017, behind only Russia.
Lynn Kennedy, professor of agriculture economics and agribusiness at LSU, said Mexico and Canada’s initial lists of products they will slap retaliatory tariffs on spared most of the state’s biggest products, like soybeans. Canada’s tariffs on plywood and some chemical products could be a negative for some Louisiana companies.
But the rising number of countries imposing tariffs and retaliatory tariffs is cause for concern, he said.
“We’re doubly harmed because not only do our producers feel the effects but we’ve got the transportation and export infrastructure in the state would be affected,” he said. “All the corn and soybeans produced in Illinois and Iowa and Missouri, they all pass through (Louisiana).”
Ed Hayes, an attorney and board member of the World Trade Center of New Orleans, said one saving grace for American companies is the ability to apply for exclusions from the Commerce Department, though the process is slow.
Canada and Mexico are “absolutely key to Louisiana’s economy,” Hayes added.
“The last thing we want is for Mexico and Canada to put retaliatory tariffs on our agriculture products.”
Commerce Secretary Wilbur Ross said the tariffs — 25 percent on imported steel and 10 percent on aluminum— would take effect Friday. In imposing them, the administration is following through on a pledge to do so after having earlier granted exemptions to the affected nations to try to buy time for negotiations.
The U.S. tariffs coincide with — and could complicate — the Trump administration's separate fight over Beijing's strong-arm tactics to overtake U.S. technological supremacy and negotiations to rewrite the North American Free Trade Agreement.
President Donald Trump had announced the tariffs in March, saying they were necessary to protect the United States from unfair competition and thereby bolster national security. The administration has argued that foreign production of steel and aluminum has driven down prices and hurt U.S. producers, creating what the Commerce Department has called a national security threat.
But in targeting its own allies, the U.S. tariffs will widen a rift with normally friendly trading partners, and the likely result of actions and counteractions is likely to be higher costs and reduced access to key goods and materials.
Advocate business reporter Sam Karlin contributed to this report