To protect American industries and manufacturers, the United States’ President Donald Trump has imposed and will impose specially rated tariffs (import taxes) on certain items. It seems like China is the main target by President Trump; but it is not limited to China. Many other countries, such as South Korea, Japan, India, Mexico, and so on, have been and will be subject to specially rated tariffs. President Trump’s such a drastic measure will make other countries almost impossible to export certain items (e.g., home appliances, automobile, iron and steel) to the United States.
What would be consequences of such a drastic measure by President Trump? Will President Trump achieve his goal of protecting U.S. industries by using such measure? Will other countries copy President Trump’s such move in an expression of retaliation, which may lead to international trade warfare?
Hi! Sabine,
I agree that consumer prices of certain products in the United States are likely to go up, if we no longer import cheap products from China and some other countries. In spite of its impact on increasing consumer prices, should president Trump's approach is beneficial to U.S. national economy in the long run? I believe that you have already answered it. Trump's such move is just just rhetoric than policy.
Thank you Sabine for your insight!
Don
I perceive a temporal upwelling of the prices of steal being manufactured in the US. Increase in tariffs on imported steel in the US should not be exaggerated and by bringing in China because it is the 11th exporter of steel to the US. The most hard hits will be Canada, Brazil, Mexico, Russia South Korea and to some extent Japan and Turkey who in total export over 78% steel and aluminum to the US. I therefore do not expect the EU and China to retaliate in this sense because any action will amount to trade war which shouldn't be the case.
In the short run, prices of steel and aluminum will go higher provided the large companies in the US such as ADI metals, United aluminum etc can compensate for such temporal supply breaks (that is if those countries choose not to export at such higher tariffs). In the long run, it is clear that steel and aluminum companies in the US will need to be able to maintain such supplies.
Nonetheless if companies in the US still decide to still import at such tariff increase and choose not to shift the cost to the final consumer, then Trump should be ready to witness decline in employment rate that he tauts about because cost of production would be cut down.
Finally if this continues in the long run, maybe steel and aluminum finished products such as cars from the US and other equipment, patronage from hard hit countries such as Canada, Japan, Brazil, etc may also go down. But there is always a better way to retaliate in the field of geoeconomics than trade wars. Maybe Trump has got it all sorted out!
Oliver,
Thank you so much for your sharp insight. Given your answer, it looks like that increasing tariff will not help any countries including the U.S.
Don
Donald Trump will continue with his new " trade policy" . A country with 40 million trammers, with 40 million workers that receiving vouchers to survive the current month, a country with $ 2,200 billion of debt must take radical reforms to save many jobs in U.S. Follow up "global trade war" , EU and China are ready .....
Dear Mehmed,
Thank you for your answer. Some people believe that the worst case scenario is the coming of another great depression as a result of the upcoming international trade war. I hope the does not happen.
Don
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