President Donald Trump said Last week, they have decided to levy 25 percent duty on all steel imports and 10 percent on aluminum imports. Markets reacted more predictably, and the move was widely condemned by many economists and other commentators. But the costs of trade protection have been widely estimated, and these charges may provide the basis for the elimination of widespread hunting trade practices for the past two decades.
Broadly speaking, addressing unfair trade in steel and aluminum could set the stage for reducing the overall US trade deficit, which would help rebuild other manufacturing industries.
Steel and aluminum business crisis is driven by Development of huge production capacity, leading to dumping imports by China and solo singing in many other countries. Commerce Department Report In investigating national security threats posed by imports of steel and aluminum products.
Over the past two decades, China and other countries have invested heavily in excess steel and aluminum capacity, and have used large-scale subsidies to drive prices below cost, driving many producers, especially the United States In (which has the world’s most open markets), out of business. Dozens of American steel mills and aluminum smelters have shut down, ending more than 100,000 good jobs.
Worse still, China and other countries are using that artificially discounted metal in a wide range of markets in the world, from auto parts to washing machines and wind mills. Therefore, the first step to end unfair trade is to get rid of excess capacity in steel and aluminum.
Trade policy in these industries should be aimed at leveling the playing field so that world class domestic producers can compete properly on the global markets. Charges will help achieve that goal. The cost of the global tariff proposed by Trump will be minimal. If imposed on real imports in 2017, the tariff would cost less than $ 10 billion (and would certainly fall with import tariffs). This is less than .05 percent of our GDP, which was more than $ 19 trillion last year, which is a small amount.
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But this figure is very large. In 2002, President George W. Bush imposed a broad, 30 percent board tariff on steel. Free The US International Trade Commission has estimated that The actual loss from those steel tariffs was only $ 30.4 million, or less than one thousandth of one percent of GDP in 2002. But we can do better than this.
Leo W., president of United Steelworkers. Gerard Suggests the way forward For improving and better targeting steel and aluminum trade remedies. Gerrard has suggested that Canada should be exempted from the tariffs (United Steelworkers represent both US and Canadian plants), and that Canada needs to address “strong enforcement” and “global overcapacity in steel and aluminum” Cooperation “.
Simply put, Canada combined with China and other countries to implement tariffs similar to those of steel and aluminum identified from the Department of Commerce and Steel (including Brazil, South Korea, Russia, Vietnam and six others in steel, and Hong Kong). States must join; Russia, Venezuela and Vietnam in aluminum). Canada should also retaliate against the United States in these cases. And we should offer similar deals for fair-trade countries in the European Union, Japan and others that would meet these conditions. This entails a cooperative, global solution to address the problem of global overcapacity in the steel and aluminum trade.
But even though we eliminate unfair trade in steel and aluminum, those products make up only a small part The overall US goods and services trade deficit, Which reached $ 566 billion in 2017. The growing trade deficit is largely attributed to the loss of 5 million American manufacturing jobs over the past two decades, and the rebalancing of trade is the key to the rebuilding of American manufacturing. alone The most effective tool available for imbalance trading And the reconstruction is intended to re-align the US dollar, which is worth 31 to 44 percent more relative to the currencies of China, Japan and the European Union, which are the world’s major surplus economies.
In 1971, and again in 1985, the United States made extensive use of currencies and global trade, to overcome the threat of board tariffs or tariffs. Most recently in the 1985 Plaza Agreement. With the widening trade deficit, it may soon be time to consider such measures.