President Donald Trump It is proposed to impose a 25 per cent duty on steel and 10 per cent on aluminum, which will start from next week. This decision is bizarre, costly and ultimately fruitless, as it will not provide any economic or national security benefits.
In theory, the new tariffs are justified by the president’s so-called “Section 232” authority to limit imports endangering national security. The problem, however, is that the Department of Defense does not agree with the conclusion that steel and aluminum imports pose a risk to the United States. its Report good The issue reads: “[T]US military requirements for steel and aluminum are only about three percent of US production. Therefore, the DoD does not believe that in conclusion [section 232] Reports impact the ability of DoD programs to obtain steel or aluminum to meet national defense requirements. “
Actually, the United States Imports more steel National security partners from elsewhere, with 16 percent coming from our northern neighbor. Other top sources include Allied nations such as South Korea and Mexico. In contrast, geopolitical rival China has only 2 percent of US steel imports. In short, there is no national security justification for the broad set of charges of friends and foes alike.
Even if someone accepts the face value by the Commerce Department in search of national security, these proposed tariffs will be exceeded. recommended Universal 24 percent steel tariff and 7.7 percent aluminum tariff. The president has also rejected an alternative to these blanket tariffs from the Commerce Department, which would target steel tariffs to 12 countries and aluminum tariffs to five. In both cases China will be included, but not Canada, Mexico or the European Union.
Tariffs translate directly into higher prices for consumers and reduced employment in affected industries. Reflecting these concerns, the stock market fell sharply after the announcement. Financially negative is hardly imaginary. In 2002, President George W. Bush imposed a steel tariff from 8 percent to 30 percent. Despite the fact that they discounted key affiliates such as Canada and Mexico, and targeted tariffs on specific products, Guesses This resulted in high steel prices with 200,000 jobs and lost wages of $ 4 billion from February to November 2002.
Political cartoon on economy
But high prices and lost wages are not the only downside. In response to these charges, our business partners will certainly take vengeance.
European Commission President Jean-Claude Juncker Said on thursday He would “bring a proposal for WTO-compatible countermeasures against the US in the next few days” to the impact of tariffs on EU exports, Juncker said, adding that “instead of providing a solution, the move may only exacerbate matters.” ” He further warned, “The European Union will respond strongly and honestly to protect our interests.” China also has Warn “If America’s final decision affects China’s interests, we will take retaliatory action in response to 232,” said Wang Hejun, a senior Chinese commerce ministry official.
Again, vengeance concerns are a lesson in history. In 2002, the European Union threatened to impose $ 2.2 billion in retaliatory tariffs against the United States in response to the steel tariffs. This response is one of the reasons that every surviving former president of the President’s Economic Advisory Council has signed on. Letter Last year, Trump urged him not to impose tariffs.
Finally, the tariff is set to be brought down. The Bush tariff was withdrawn at least two years after several countries filed a lawsuit against the United States at the World Trade Organization, which ruled the tariffs to be illegal. Trump tariffs face similar fate.
There is an expectation that Trump will withdraw his proposed tariff. They have not yet given a description of the exact countries and products will target their tariffs, and at the moment this is only a comprehensive proposal.
Regardless, a national security check cannot justify a blanket 25 percent tariff on all steel imports and 10 percent on all aluminum imports. Implementing such tariffs will undoubtedly be a challenge at the World Trade Organization. Meanwhile, these tariffs will result in negative consequences for US consumers, US producers who use imported steel, and US exporters who are the vengeance of our trading partners.