In this file photo taken on April 12, 2016 a worker agitates molten steel during the smelting and casting process at the Saint-Gobain PAM factory in Pont-à-Mousson, north-eastern France.

NEW YORK: The imposition of tariffs on the import of steel and aluminium products by the United States (US) will also impact Malaysia.

Malaysia has already been affected by the earlier imposition of tariffs on solar panels by the US.

The Malaysia External Trade Development Corporation (MATRADE) offices in the US are monitoring the moves as such.

President Donald Trump announced on Thursday that he would impose tariffs of 25 per cent and 10 per cent respectively on the import of steel and aluminium products, under Section 232 of the US trade law on grounds of national security interests.

The decision came as a surprise as it was generally felt that the President would carefully consider the pros and cons, and not rush into taking a decision, as the move would not only invite retaliatory action from the trading partners, but also sour relations with friends and allies, whose exports would be hit by the tariffs.

Although the finer details of the President’s decision are not yet available, experts wonder how this will play out in particular with US allies, Canada and Mexico, both of which are also members of the North American Free Trade Agreement.

Such a move, New York-based experts argue, would go against the “letter and spirit of the free trade, the core element of the NAFTA partnership”.

“China may respond with quick and proportional retaliation against US exports, not necessarily limited to the steel and aluminium sectors. Others may choose to bring their concerns to the World Trade Organisation.

“The imposition of tariffs on steel and aluminium will also reverberate throughout the US economy and possibly negate some of the benefits of the recent tax cuts. Downstream users, such as the automotive, aircraft, and boat industries, will pay more for inputs,” Wendy Cutler, the former Acting Deputy US Trade Representative and current Vice President of the Asia Society Policy Institute, told Bernama.

She said it is to be expected that most trading partners would call this action a protectionist measure under the guise of national security.

‘Certain trading partners may feel that they now have the green light to restrict their own imports due to national security concerns, thus hurting US exporters. Finally, our allies may be discouraged by this unilateral action and lose interest in working with the United States on a range of issues, including China’s trade practices,” Cutler added.

The announcement of tariffs comes at a time when a number of representatives of US trading partners are in the country this week, including China’s top Economic Advisor, Liu He, to urge the Trump administration to not impose the tariffs.

The imposition of tariffs on steel and aluminum will also reverberate throughout the US economy and possibly negate some of the benefits of recent tax cuts.

The stock market for one dipped and downstream users such as the automotive, aircraft, and boat industries, will pay more for inputs, resulting in higher prices for US consumers and making the country’s exports less competitive. Workers in these industries may lose their jobs as costs rise and sales fall.

While this decision will be welcomed by the US steel and aluminium sectors, which had expressed “deep concern” over the “flood of imports”, the decision will wreak havoc on sales of cars and other products using steel.

The action also comes on the heels of recent US decisions to increase tariffs on solar panels and washing machines. -- BERNAMA