Trump Preps for Damaging Trade War Over Steel Imports
The Trump administration is planning to impose high tariffs on shipments of steel from the world’s top steel producers to the United States. Experts say this could trigger a huge trade war between the U.S. and its trading partners.
Canada, Mexico, Brazil, the European Union and Japan are among the top steel exporters to the United States.
World Trade experts say it is likely that China, which President Donald Trump has criticized for cheating on steel prices, is the target of the tariffs increase.
The tariffs could trigger retaliatory measures by these countries, hurting other American industries.
High prices for American steel and increased foreign competition have driven a big decline in American steel jobs, the worker’s President Trump pledged as a candidate to protect.
There are about 385,000 jobs today, down from 624,000 jobs in 2000.
The Department of Commerce is investigating U.S. steel import deals and is expected to announce the results of the investigation soon.
The law allows the U.S. Commerce Secretary, Wilbur Ross to skirt an independent panel of U.S. trade judges and make the final decision on steel tariffs. This allows the Trump administration broad powers to determine how big and wide the tariffs would be.
If Trump Administration imposes tariffs, the World Trade Organization could deem them a violation of global trade laws allowing other countries to sue the U.S. in a World Trade Organization (WTO) court.
Trade experts are convinced the tariffs are coming but not certain of how high and against whom.
“This may be the most important trade decision that we have seen in decades, because targeted countries might retaliate with their tariffs on American products, outside the steel industry — a trade war that could cost American jobs,” says Edward Alden, a senior fellow at the Council on Foreign Relations.
“It will hit us very hard,” European Union trade commissioner Cecilia Malmstrom said at a Politico event last week. “We will have to respond by different means.”
The possible targeted retaliation alarms the American agriculture industry that exports a quarter of its products to other countries.
“It is a problem, and we are anxious about this,” says Bob Young, chief economist at the American Farm Bureau Federation, which represents 6 million U.S. farmers.
“The potential is certainly there for other countries to retaliate and American jobs could be on the line,” Young said.
He said the Chinese could easily slap tariffs on American soybeans, one of the biggest U.S. exports to China. There are about 300,000 soy farms in the United States.
The Trump administration argues that the United States is too dependent on foreign steel for military equipment and infrastructures like roads and bridges.
If steel-producing nations turned against the United States, the argument goes; we would not be able to build tanks. The U.S. auto industry is one of the biggest buyers of foreign steel and opposes the tariffs.
The Automotive Policy Council, which lobbies for GM and Ford, warned in May that sweeping steel tariffs would terminate the American auto sector jobs.
U.S. steel advocates accuse China of dumping, a practice of selling steel through an intermediary, such as Vietnam, to disguise where it is coming from, at prices lower than the world average to box out U.S. competition.
The Obama administration imposed a 500% tariff on some Chinese steel last year to fight the practice.
Chinese steel exports to the U.S. plunged almost two-thirds as a result. In total, the U.S. has imposed roughly 200 anti-dumping measures against Chinese steel products over the years.
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