Trump signals controversial tariffs will go forward
- Author: Leroy Wright Mar 06, 2018,
Mar 06, 2018, 4:40
Wall Street looked set to open lower on Monday as investors remained concerned about the increasing likelihood of a global trade war following President Donald Trump's threat to impose hefty tariffs.
In a tweet on Sunday, he argued: "We are on the losing side of nearly all trade deals". Conversely, it is unlikely to create significant new employment in these two sectors given that current USA steel and aluminium production remain close to a 10-year average.
Mr Trump's announcement last week that he would tax imported steel and aluminium has prompted worldwide reaction.
"It's time for a change!"".
Trump announced last week the 25 percent tariff on steel and 10 percent tax on aluminum imports.
The steel and aluminum tariffs were recommended by Commerce Secretary Wilbur Ross after a report from his agency concluded that the glut of the metals on global markets was a threat to United States national security. "I think hes shooting one across the bow and letting people know that were not being treated fairly in these worldwide matters, and frankly I dont blame him". First it was going to happen, then it wasn't, then finally White House staff sat and waited to see what was going to happen. As former Greek finance minister Yanis Varoufakis writes in his book The Global Minotaur, the basic problem with unregulated worldwide trade is that imbalances develop between surplus and deficit countries. The president has found few GOP allies on Capitol Hill, but Rust Belt Democrats up for re-election this year cheered the administration's decision.
But Trump revived his complaints about Nafta being a "bad deal" for the U.S.in tweet on Monday and linked the talks underway in Mexico to the tariffs.
Congressional Republicans say any tariffs should be narrow in scope, and they privately warned that Trump's effort could hurt the party's hopes to preserve its majority in the fall elections. Already the European Union, China, and Canada have said they are considering reciprocal measures. "I have no reason to think he's going to change".
"Sure there may well be some sort of retaliation, but the amounts that they're talking about are also pretty trivial".
Ross called the possible European levies a "pretty trivial amount of retaliatory tariffs, adding up to some $3 billion of goods".
Checking Ross's math, we find that a 25% increase in the cost of the current $0.026 of tinplate steel in one of Campbell Soup's iconic Number 1 size soup cans would indeed raise its cost by roughly $0.006 to $0.032 per can.
Theresa May's plans for a quick post-Brexit trade deal with the U.S. have been thrown into doubt after Trump announced plans to launch a trade war with Europe.
Mr Trump spoke shortly after a spokeswoman for Mr Ryan said the GOP leader was "extremely worried" about the tariffs setting off a trade war and had urged the White House "to not advance with this plan".
His administration has since made it clear the tariffs - due to be announced formally this week - would apply to imports from any country, including Britain.
So affected countries would be obliged to exact compensation by imposing tariffs or other measures on goods that they import from the United States.
As the president dug in on his position, any potential compromise with foreign trading partners and Republican lawmakers was expected to still include some form of tariffs.
Investors who want to focus on US steel may find a better opportunity in XME, which includes a hefty 49.7% tilt toward steel producers, along with coal & consumable fuels 14.1%, aluminum 12.0%, gold 9.0%, silver 6.3% and copper 5.1%.
A tit-for-tat trade war would leave all parties worse off, they say, while doing little to address the underlying causes of the United States' big trade deficits.