Canada could be caught in the middle of a United States trade-war
- Author: Leroy Wright Mar 14, 2018,
Mar 14, 2018, 9:55
When President George W. Bush raised steel tariffs in 2002, U.S. gross domestic product declined by $30.4 million, according to the U.S. International Trade Commission.
Brussels has come under pressure from the European steel industry to protect its interests.
The article reported that foreign leaders said the tariffs will put their citizens out of work and suggested a trade war will ensue.
The US is the world's biggest importer of steel, purchasing 35 million tonnes of raw material in 2017. He might not understand the basic economic implications of his most recent moves, but Trump surely gets the politics of angering his base. US aluminum jobs have been mostly lost to places with cheaper electricity (i.e., Iceland, which is coincidentally also not China). Tariffs ensure the preferences of politicians, instead of the preferences of consumers, to determine how resources are allocated.
The Trump administration is seeking to raise tariffs on a wide range of Chinese goods.
On March 8, the president slapped a 25 percent tariff on the metal, while also putting a 10 percent duty on foreign aluminum. Steel and aluminum are used to make consumer goods like cars, lawn mowers, and beverage cans. We both benefit from our transactions, but they benefit more than we do. GATT and WTO took as given the level of tariffs existing at the time.
"The risk that the steel tariff could cause a tariff war is real". Their reach is in almost every sector of the USA economy - and that gives the tariffs a wide and worrying reach. After all, the people in the sugar industry are only a tiny percentage of the US population.
"These measures could make a significant impact on the economic and cooperative relationship between Japan and the USA, who are allies", said Japan's foreign minister, Taro Kono.
But right now, the more pressing issue is the threat of Donald Trump imposing tariffs on Canadian steel and aluminum.
The EU has warned that it stands ready to slap "rebalancing" tariffs on about 2.8 billion euros ($3.4 billion) worth of USA steel, agricultural and other products, like peanut butter, cranberries and orange juice.
The head of Eurofer, Europe's main steel federation, said Trump's reasons for slapping tariffs on steel and aluminum were an absurdity and that the move could cost tens of thousands of jobs across the continent. Pain which does not improve the economy is hard to justify. "I expect that Canada and Mexico will take action to prevent transshipment of steel articles through Canada and Mexico to the United States", he wrote.
That means that while Trump has singled out China for criticism, his latest tariff hike is likely to hit U.S. allies Japan and South Korea harder. The U.S. now applies a 2.5 percent tariff on European auto imports. Our steel industry is in bad shape.
A meeting in Brussels between Malmstrom and her US counterpart Robert Lighthizer on Saturday ended without a breakthrough, as the European Union didn't receive assurances that it will be exempted from the metal tariffs.
They were also seen as hypocritical at a time when the Republican administration was trying to encourage other countries to liberalize trade policies - and reduce their tariffs - through the Doha Round of World Trade Organization talks that were happening at the time. Brazil, which is the second biggest supplier of steel to the United States after Canada, remains open for a dialogue to reach an understanding with the United States and is talking to other countries to learn about measures they are considering, he said.
"If a trade war begins between China and the US it won't imperil financial flows since these countries are two large economies and China has a sustainable balance-of payment surplus in bilateral trade with the US", Huang told Sputnik China.
"You know when it starts but not how it will turn out" when countries engage in mutual retaliation, WTO Director-General Roberto Azevedo said in remarks to reporters after a meeting with Brazilian President Michel Temer.