trade-warDuring the U.S. Presidential campaign, candidate Trump consistently made clear that he wished to enact tariffs on some of our biggest trading partners, including China and Canada. Trump, along with a number of supporters, felt that the U.S. has gotten the short end of the stick on almost every trading agreement it has made over the last 40 years.

Now that Trump is President, he has the opportunity to push forward his new agenda. Whether or not he puts punitive tariffs on steel imports has not been decided, though he has been contemplating this for some time. Axios reported that President Trump is seriously considering a new tariff of 20 percent.

Wilbur Ross, the Secretary of Commerce, is pushing forward on this issue. He wishes to conclude a rapid investigation regarding the threats steel imports pose to U.S. security under the authority of the Trade Expansion Ace, Section 232.
 

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Fear has ignited over the potential of retaliations by America’s closest and most important allies due the potential erection of tariffs on steel imports. These allied countries are actually the largest importers of steel, not China as some believe.

Nearly half of America’s steel imports come from allied countries like Canada, South Korea, Japan, Mexico and Brazil. Chinese imports fall under four percent of America’s total steel imports. In comparison, Taiwan supplies more steel to the U.S. than does China.

The fear is that if tariffs are implemented, trade retaliation will break out into a widespread tariff and trade war among some of the largest trading nations of the world. This could possibly result in rising prices on American steel users causing them to be less competitive on a global scale.

Thanks to a number of trade lawsuits involving anti-dumping measures, U.S. steel is already 55 percent higher than last year. Longbow Research Senior Analyst Christopher Olin warned:
“Retaliation is one of the risks to this whole story. You’re going to raise the price of steel” and this increases the global pressure on the significant steel buyers of North America.
However, Secretary Ross was complaining a few weeks ago about various steel imports, primarily having to do with China. He accused the Chinese of consistently dumping its steel in other national markets so that it makes its way into the United States.

China’s argument against tariffs centers on their case that steel shipments to the U.S. are only lower-end products which are not even produced by American companies. Higher end steel imports by the Chinese had already been pretty much devastated by the imposition of duties imposed by the U.S. over the past few years.

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