American president Donald Trump decided to increase tariffs on America’s imports of steel and aluminum. Among the many reasons Mr. Trump mentioned is the need to protect such strategic sector of the American economy once the US military needs such commodities to build its equipment. Such statement was received with a lot of skepticism by many analysts. According to EU authorities, the measure could be a disguise for protectionism.
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) 1 March 2018
The measure shook many trading partners such as the EU, Brazil, China, and Japan. The EU has already been facing issues with subsidized steel from China, now with this policy being approved across the Atlantic, EU leaders are seeking to impose countermeasures that would comply with the World Trade Organization guidelines.
So far, the bloc has announced that it is going to retaliate against American goods from three main sectors: manufactured and agricultural goods, steel, and other industries.
European policymakers decided to strike where it hurts: businesses that have straight ties with the Republican Party. For example, Harley-Davidson motorbikes and bourbon producers such as the Jack Daniels brand.
It didn`t take long to Trump to tweet about such scenario.
If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S. They make it impossible for our cars (and more) to sell there. Big trade imbalance!
— Donald J. Trump (@realDonaldTrump) 3 March 2018
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) 2 March 2018
It looks like that this imbroglio is going to escalate. It`s hard to assess beforehand the main outcomes of this measure. It should be noted that such initiative might save some jobs, although automatization is another challenge on the topic. Also, if American steelmakers fail to meet the demand of the domestic market prices might increase throughout the whole chain.
Privileging economic gains in such unilateral manner is likely to hurt a bit more the American soft power in the world.