In the roller coaster ride that has been the process of rolling out the Trump steel and aluminum tariffs, President Donald Trump first announced measures against all imports into the United States, other than from Canada and Mexico. The administration later exempted several other U.S. allies from the tariffs—at least temporarily—including South Korea, Australia, and the European Union—while also announcing procedures to apply for further exemptions. Later those exemptions with respect to steel were lifted, meaning, they are to be applied globally, while tariffs on aluminum apply to all countries of origin except Australia and Argentina. (Argentina is covered by a quota.)
Meanwhile U.S. allies like the Middle Eastern island kingdom of Bahrain are still being left out in the cold. Home to the U.S. Navy’s Fifth Fleet and its 20,000 sailors at the port of Manama, Bahrain was the world’s eighth-largest producer of aluminum in 2016, with 970,000 tons, accounting for 10% of the country’s economy. The kingdom has also taken recent steps to expand its aluminum production.
The Moody’s credit-rating agency says Bahrain will be among the hardest-hit countries by the tariffs. Aluminum made up 61% of the country’s exports to the U.S. last year. Bilateral trade between the two countries has been growing steadily since they signed a free trade agreement in 2004.
The tariffs could also adversely impact other U.S. allies in the region, including the United Arab Emirates, Qatar, and Turkey.
The steel tariffs are adding to the tension between the U.S. and its NATO ally Turkey, two countries that once enjoyed a closer friendship than they have today. Turkey has also not received an exemption from the tariffs.
Turkish steel producers buy nearly four million tons of scrap steel from the U.S. every year, exporting it back after processing, mostly as construction steel. Turkey, a major steel producer, felt put off by the steel tariffs given the exemptions originally given to some countries.
Officials from Turkey’s Economy Ministry are in contact with their US counterparts in an effort to gain an exemption from the steel tariffs. The Turkish government has indicated the country might impose new tariffs on US agricultural and technology exports. The decrease in Turkish steel exports to the US could also lead Turkish steel producers to import less scrap steel from the U.S.
Turkey’s main opposition party is pushing for tariffs on cotton imports from the United States. Turkey imported $519 million of US cotton last year, roughly the equivalent of the $525 million of angular iron rods Turkey exported to the U.S. in 2017.
Interestingly, the U.S. ran a $3-billion trade surplus with Turkey last year. Now, some in Turkey want the principle of reciprocity to be applied to trade with the United States, a concept that Trump has instituted as the cornerstone of his own trade policy.
