Tariffs on Steel and Aluminium Imports ..... Trump Administration starting a possible trade war?
- The Youth's Lens
- Jun 23, 2018
- 2 min read
Updated: Jun 28, 2018
An analysis of the current tariffs imposed by the United States of America on steel and aluminium imports and its effects on the international community by our economist Rishika Jain.
What now President Trump?
The Trump administration put tariffs on steel and aluminium imports from Canada,Mexico and the European Union. 25% on steel imports and 10% on aluminium imports.
In addition, quotas and volume limits were placed on other countries such as South Korea, Argentina, Australia and brazil instead of tariffs.
The tariffs were originally announced on March 1 when President Donald Trump said that the United States was being treated unfairly.
"People have no idea how badly our country has been treated by other countries. By people representing us who didn't have a clue" Trump said, arguing that trade trends "destroyed" American steel and aluminium industries.
There must have been some controversial responses?
Yes. The European Commission(EC) has angrily reacted to this news. In a tweet following the news, the EC said; “The EU believes these unilateral U.S. tariffs are unjustified and at odds with the World Trade Organisation rules.This is protectionism, pure and simple.”
"The U.K. and other European Union countries are close allies of the U.S. and should be permanently and fully exempted from the American measures on steel and aluminium," a U.K. government spokesperson said.
The EU is going to retaliate and apply tariffs to a list of US goods ranging from whiskey to pleasure boats
The move means the EU has in effect ignored warnings from Mr Trump that any countermeasures against his steel and aluminium tariffs would be met by further retaliation.
India has dragged the US to the World Trade Organisations dispute settlement mechanism over the imposition of import duties on steel and aluminium, an official said.
Some experts, however, opined that dragging the US in the dispute over the issue is not in favour of India as New Delhi has a trade surplus with America.
India's exports to the US in 2016-17 stood at USD 42.21 billion, while imports were USD 22.3 billion.
In My Opinion.....
A tariff on imports of foreign steel would raise the price of imported steel and encourage US firms and consumers to buy domestically produced steel instead. This shift would cause some disruption in the firms and its costs of production. There would an increase in cost of production due the the tariffs and shift to domestic firms and this would raise the price for the US consumers.
Apart from more expensive prices for consumers, there is retaliation on US exports which is likely to harm the US export industries and this would cause a disruption the economy, possibly a trade deficit.
The threat of retaliation and the dispute at the WTO, could possibly start a trade war, which would create uncertainty as firms would be unaware of its affects.
All in all, this imposition of tariffs is likely to negatively affect the trade between the involved countries.
Bibliography and References
Written by Rishika Jain, Edited by Chandan Samal
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