US and Japan set to end Trump-era steel tariffs

The US and Japan are set to announce an agreement on Monday that will end tariffs imposed on Japanese steel under former president Donald Trump, people familiar with the situation said.

Washington will suspend the 25 per cent levy on incoming steel imports from Japan up to a certain threshold, with anything beyond that still subject to additional charges, said the people who declined to be identified as the details are private.

The solution mirrors the accord that the US reached with the EU in October that ended punitive measures on as much as $10 billion of each other’s goods.

The truce doesn’t cover aluminium imports, which remain subject to a 10 per cent tariff, the people said.

A spokesman for the Office of the US Trade Representative declined to comment. The Commerce Department and the Japanese embassy in Washington didn’t immediately respond to requests for comment.

The metals dispute started in 2018, when Mr Trump imposed duties on steel and aluminium from the EU, Asia and elsewhere, citing risks to national security.

The EU subsequently retaliated, hitting products including Harley-Davidson motorcycles, Levi Strauss & Co jeans and bourbon whiskey.

The US made an offer to Japan to resolve the dispute in December, but Tokyo was holding out for a better deal and had wanted the tariffs to be abolished completely, an official with knowledge of the talks said at the time.

Washington’s proposal to Japan was similar to the deal with the EU, in that a certain amount of steel and aluminium — based on the historical averages shipped — will be allowed to enter the US free of duties, the people said.

The US imported about 1.7 million metric tonnes of steel from Japan in 2017, the most recent year not affected by the tariffs, and 1.9 million tonnes in 2016, Census Bureau data show. In 2020, inbound steel shipments to the US from Japan totalled 732,158 tonnes, Census said in a separate report.

Last month, the US and UK started talks to address tariffs on both steel and aluminium and the problem of global overcapacity, aiming to remove a long-standing irritant between the two nations and focus attention on China.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

US and Japan set to end Trump-era steel tariffs

Washington to suspend 25% levy on incoming steel imports from Japan up to certain threshold