Economic News
Trump Plans Tariffs on Steel, Aluminum
Even before President Donald Trump was elected to the highest office in the land, he made it clear that he was no fan of trade agreements. In fact then-candidate Trump repeatedly promised not to participate in the Trans-Pacific Partnership (TPP) and said he would likely move to terminate the North American Free Trade Agreement (NAFTA). Now the President seems set to enact some new import tariffs on steel and aluminum, much to the dismay of U.S. allies and trading partners.
As CNN Money reports, President Trump announced plans to impose a 25% tariff on steel as well as a 10% tariff on aluminum in a bid to “level the playing field” for American manufacturers of said metals. Trump stated this new policy could be enacted as soon as next week. However it’s unclear if there might be any exemptions to these tariffs, which has lead to frustration among countries like Canada as well as the European Union that trade heavily with the U.S.
In a statement regarding Trump’s plans, European Commission President Jean-Claude Juncker said, “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk,” adding that the E.U. would “react firmly and commensurately” to such a move. Similarly Canadian Foreign Minister Chrystia Freeland called the proposed tariffs “absolutely unacceptable” and said, “Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.”
These words from the E.U. and Canada suggest that the United States could be instigating a trade war — something that the President doesn’t seem at all concerned about. On Friday morning, the President took to Twitter to say, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” He later added, “We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!”
Despite the President’s assertion that trade wars are “good,” most economists take the opposite view. For example BNP Paribas economist Paul Mortimer-Lee told Business Insider, “History suggests trade wars lead to everyone losing.” As a result, he added that President Trump’s current stance was “extremely concerning.”
Ultimately, if President Trump does enact the planned steel and aluminum tariffs, the United States could very well be headed for a trade war. Beyond the potential economic implications that would bring, it also puts the U.S. at risk of alienating key allies around the world. However, it’s not like we didn’t see this coming — now we just have to sit back and see what happens.
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Other Articles by Jonathan Dyer
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