Keyword Summary

Trump´s Steel and Aluminum

Tariffs are Counterproductive

Written by: Pedro Manuel Ardila Armirola

For: Ildikó Szegedy-Maszák´s

31/01/2024
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Main Reading
Chad P. Bown (PIIE): Trump’s Steel and Aluminum Tariffs Are Counterproductive. Here Are 5 More
Things You Need to Know (2018)

https://piie.com/blogs/trade-investment-policy-watch/trumps-steel-and-aluminum-tariffs-are-count
erproductive-here-are?utm_source=update-newsletter&utm_medium=email&utm_campaign=201
8-03-12

Introduction
1. Effects of Tariff Policy and Who is really affected
2. Retaliation for the United States
3. Disruption in international trade in steel and aluminum

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Effects of Tariff Policy and Who is really affected
This decision by Trump regarding tariff rates on steel and aluminum brought with it a significant
impact not only on the domestic economy of the United States, but also on the global economy.

Although at first the excuse of “National Security” was supported thanks to the argument that it
would benefit local producers, what really happened was that this impacted the manufacturing
costs that use steel and aluminum, translating this into a harm to the American consumer.
Likewise, it is important to highlight the fact that although China is the largest exporter of steel to
the United States, and the second largest exporter of aluminum, these tariffs will not have much
effect on Chinese relations, and they will have more effect on other trade allies.

These tariffs generate a slowdown in the internal economy, since products used for construction
such as rods, mesh or wire will have an increase in price as a result of these taxes, without
leaving aside the mobility and land transportation sector. air and sea. Likewise, generally the
effects that this type of policies bring is that the export of national brands to other countries is
affected by a tariff rate imposed by them. At the military level there will also be a significant
impact, since there is an increase in the price of the raw materials through which war material is
created.

From the above we can deduce that this policy does not really generate a beneficial effect for
Americans, quite the opposite, since by making the raw materials of many basic goods and
services more expensive, consumers are affected by this increase in price.

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Retaliation for the United States
The tariffs imposed by the United States on aluminum and steel could have serious
consequences for the country's economy and diplomacy. By violating the rules of the World Trade
Organization (WTO), the United States exposes itself to its most affected trading partners, such as
Canada, Mexico, the European Union and China, filing a complaint with the multilateral
organization and applying retaliatory measures. . These measures could affect various sectors of
the US economy, such as agriculture, the automotive industry and technology, and cause an
escalation of trade tension that destabilizes the global system. President Trump's argument to
justify the tariffs is that he seeks to defend national security and local industry in the United
States, as well as pressure China to reduce its excess steel and aluminum production capacity.
However, this argument is questioned by many experts, who consider that tariffs not only make
products more expensive for consumers and companies that use these metals as raw materials,
but also deteriorate relations with strategic allies of the United States, and that do not address
the underlying problem of global metals overcapacity, which requires a coordinated and
multilateral solution.

Disruption in international trade in steel and aluminum

International trade and the global economy are negatively affected by the tariffs on steel and
aluminum that the United States has imposed. These protectionist measures are a form of state
intervention that seeks to favor national producers over foreign competition, but that has
negative effects for both the country that applies them and the rest of the world. Tariffs on steel
and aluminum have a direct impact on the producing and exporting countries of these metals,
such as China, Canada, Mexico, Brazil, India and the European Union. These countries see their
export revenues reduced, which affects their economic growth, their trade balance and their
investment capacity. In addition, tariffs can cause an oversupply of these metals in the world
market, which lowers their prices and harms the producers of other countries that are not subject
to tariffs.

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Furthermore, tariffs generate a climate of uncertainty and confrontation between trading partners,
which can lead to an escalation of retaliation and conflicts with undesirable consequences. The
countries affected by the tariffs can respond with similar measures or with complaints to the
World Trade Organization (WTO), which can trigger a trade war that further damages international
trade and the global economy. Tariffs can also erode trust and cooperation between countries,
making it more difficult to resolve other global problems, such as climate change, security, health
and human rights.

Finally, tariffs weaken the multilateral trading system, which is based on respect for the rules and
dialogue between the WTO member countries, and which aims to promote integration and global
development.

As a way to conclude, we can demonstrate that this policy is nothing but a nuisance, and that the
effects that it sought to create do not outweigh the externalities that this political decision could
have on the economy. Personally, I think that what Trump wanted was to harm China and gain an
advantage over the economic war they are fighting, but it had the opposite effect, as the most
affected are the American consumers.

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Bibliography

1) BBC News Mundo. (2018, March 9). Estados Unidos: en qué consisten y a quién afectan los
polémicos aranceles al acero y al aluminio aprobados por Donald Trump [United States: what
are they and who are affected by the controversial tariffs on steel and aluminum approved by
Donald Trump]. BBC News Mundo.Estados Unidos: en qué consisten y a quién afectan los
polémicos aranceles al acero y al aluminio aprobados por Donald Trump - BBC News
Mundo

(Who Is Affected by Trump's Approved Tariffs)

2) Monvaga. (2020, October 15). La industria del acero y su impacto económico y social [The
steel industry and its economic and social impact]. Monvaga.La industria del acero y su
impacto económico y social | Monvaga

(The importance of steel and its impact on the economy)

3) Statista. (2020, February 5). Global steel exports by country 2019 [Graph]. Statista.Leading
countries for steel exports 2022 | Statista

(List of leading steel exporting countries)

4) World’s Top Exports. (2020, December 21). US aluminum imports by supplying country.US
Aluminum Imports by Supplying Country 2022 (worldstopexports.com)

(America´s top 6 aluminum suppliers)

5) BBC News. (2020, August 31). WTO says US tariffs on China broke global trade rules.WTO
says Trump's US steel tariffs broke global trade rules - BBC News

(Trump's tariffs affect previous trade agreements)

6) BBC News Mundo. (2019, September 4). Guerra comercial entre Estados Unidos y China:
¿cómo afecta a las industrias tecnológicas de ambos países? [Trade war between the United
States and China: how does it affect the technological industries of both countries?].Guerra
comercial entre Estados Unidos y China: ¿cómo afecta a las industrias tecnológicas de
ambos países? - BBC News Mundo

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 (The trade war between China and the US affects the global market)

7) Baker, P., & O’Shea, T. (2019, October 17). Insight: Key impacts of international tax and trade
disruption on global supply chains. Bloomberg Tax.INSIGHT: Key Impacts of International
Tax and Trade Disruption on Global Supply Chains (bloombergtax.com)

(Understanding How Tariffs Affect Global Supply Chains)

8) Rushe, D. (2019, August 23). Here are the reasons for Trump’s economic war with
China.Here are the reasons for Trump's economic war with China | Donald Trump | The
Guardian

(Keys to understanding the U.S.-China economic war)