Trump seeking tariffs on up to US$60b Chinese goods

Lester Mason
March 15, 2018

US steel jobs have been mostly lost due to technological change (i.e., robots, not China). He left open exemptions for other nations.

That's a long shot - Trump has railed against the USA trade deficit since entering the race for the presidency in 2015 - but we hope he will, as do many Oklahomans who will be impacted. The domestic steel industry has been "adversely affected" by lower-priced steel imports, Commerce concluded, losing market share and closing production facilities.

The impact will be felt in the auto industry and businesses heavily reliant on steel - from the likes of Deere & oil drilling.

The tariffs would cost lost trade worth $2.6 billion a year for the European Union and $1.1 billion for South Korea, according to Chad Bown, senior fellow at the Peterson Institute for International Economics.

A 25 percent tariff is considered quite steep.

Consumers also could see small increases in products from canned soup to beverages.

On March 10, Europe's Commissioner of Trade Cecilia Malmström and Japanese Economy and Trade Minister Hiroshige Seko metUS Trade Representative Robert Lighthizer, where the two outlined their arguments with Lighthizer, saying that both the European Union and Japan are strategic trade and security partners of the United States and are therefore exempt from the new tariffs according to US law that grants exceptions for allies and those that do not pose a national security threat.

The extent to which the tariffs boost US steel and aluminum producer margins will depend on the extent to which they are applied and enforced broadly.

In the 1980s, American steelmakers needed 10.1 man-hours to produce a ton of steel; now they need 1.5 man-hours, says Joe Innace of S&P Global Platts. The International Monetary Fund says the global economy grew 3.7 percent a year ago and expects it to grow 3.9 percent in 2018.

"As I said to the congressional leadership, as I said to the president last week: We are always happy to better co-ordinate and to work together to do even more to ensure that we are protecting the North American steel industry". Tariffs might make Trump and his diehard followers feel better, but they'll hurt more American pocketbooks than they benefit.

Indonesia said that while it the steel and aluminum tariffs are not a big problem for its industry, the country would be in trouble if the USA targeted its palm oil, a key export used in a huge number of consumer products. Japan, South Korea, China, Taiwan, Germany and Brazil were hardest hit.

In the last few days, China has warned U.S. of retaliation.

In 2002, when the US implemented steel tariffs, the result was a loss of 200,000 jobs, according to a 2003 report by Trade Partnership Worldwide. Canadian foreign affairs minister Chrystia Freeland described Nafta and the steel and aluminium tariffs as "quite distinct issues", adding that "our negotiating positions are absolutely unchanged". Stated differently, the US can't harm the Canadian economy without simultaneously shooting itself in the foot.

The EU has been talking with partners about a legal challenge at the World Trade Organization to Trump's plan.

In the call with Trudeau, Trump "emphasised the importance of quickly concluding the ongoing Nafta negotiations", the White House said.

China has yet to offer a list, but soybeans have been frequently mentioned. "You'd expect a policy this bad from a leftist administration, not a supposedly Republican one". Vertical notes that similar tariffs on steel imposed by President Bush on imports under Section 201 of the Trade Expansion Act in 2002 ultimately exempted more than 700 different steel products from their effect, "prompting a resurgence in imports" after an initial slump.

The other 11 nations signed an accord last week and have reached out to China.

Gregory Mankiw, a Harvard economics professor who advised President George W. Bush, told the Washington Post: "On trade policy, President Trump appears to be listening to advisers with views far outside mainstream economics". "A lot of steel mills are now opening up because what I did", Trump crowed, without offering evidence.

Congress would do well to grow a backbone and step in before serious economic damage occurs.

Other reports by Iphone Fresh

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