More on the tariffs
Summary:
Trump’s plans for a 25% tariff on steel and a 10% tariff on aluminium is designed to promote American business, but may result in adverse repercussions from our trade partners. Despite requests for an exemption by the European Union, only Canada and Mexico are exempt from the new policy that will take effect on the 23rd. In fact, Trump stated that exemptions may take place in the future, but not for our allies. He argued that “many of the countries that treat us the worst on trade and on military are our allies.” This means that the European Union may not see the exemptions that they requested, so they may plan to take matters into their own hands.
The European Union has responded to steel and aluminium tariffs in a symbolic way, planning to place tariffs on symbolically American products such as blue jeans and bourbon. Other nations have replied to this tariff similarly. China threatens an “appropriate and necessary response” to any American tariff, and others have claimed that the tariffs violate the World Trade Organization decisions and that the United States should be taken to court. A notable fact, however, is that both China and the European Union have called for Trump to trade peacefully instead of beginning a trade war.
Analysis:
I believe that Trump’s decision to mandate tariffs will not be beneficial to the American industry. In addition to the international outcry, the tariffs will shift the American steel and aluminium market more towards a monopolistic structure as international competitors will be weakened. As we learned in our reading last week, a monopolistic approach is not beneficial to the consumers, and the government’s role is generally seen as protecting consumers.
Questions:
- Is the international community just in their retaliation to the tariffs?
- Is it more beneficial to stimulate the American steel and aluminium industry or protect consumers from a monopolistic shift?
- Will this be an isolated issue, or is America starting a global trade war?
2 comments:
I can understand the anger of the international community in retaliating to the tariffs. Especially for nations that are close allies with the US such as the EU members, this tariff imposition may seem as a sort of betrayal. However, I understand that President Trump wants to follow through with this tariff because one of his campaign promises was to bring back jobs for workers in these industries who were suffering due to international competition. While a President should follow through with his promises, I feel like these tariffs are not going to do us much good as they seem to be opposed by a lot of President Trump's top advisers and party members, and they are already showing negative consequences such as other nations beginning to impose tariffs on US exports. In the end, I fear that the domestic steel and aluminum industries may benefit, at the cost of several other industries.
Tariffs occasionally can be beneficial, but this particular one is not. For a tariff to overall beneficial, it has to be placed on something that we don't like and be placed against an irresponsible country. An example of this would be oil; decreasing oil consumption would be a good thing, and countries like Saudi Arabia have loose environmental standards. Steel and Aluminum only benefit a few, namely the workers in the Midwest, but harm all other Americans. Also, tariffs are often met with counter tariffs, which is happening. This will result in damaged foreign relations in the long run.
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