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Some countries may be exempt from President Donald J. Trump’s forthcoming trade tariffs. White House press secretary Sarah Huckabee Sanders said the proposed 25 percent tariffs on foreign steel and 10 percent on aluminum may not apply to Mexico, Canada and other countries who would be considered on a case by case basis.
Trump’s controversial tariffs reflects his campaign pledge to use protectionist policies to grow American industry and shield them from the forces of globalization. The global business community, including members of the Trump administration, have expressed concern over the decision. Trump’s top economic advisor Gary Cohn resigned five days after the tariffs were announced.
(Read more on the Establishment’s woes under Trump’s presidency).
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!
The European Union threatened to retaliate with tariffs of their own on U.S. products like orange juice, cranberries and peanut butter if the White House goes through with tariffs.
Reuters reported that the announcement sparked an immediate boost in investment in domestic steel and aluminum manufacturers. Whether tariffs actually protect American jobs, however, is a contested issue amongst economists. Previous use of tariffs have saved some jobs, but also caused price increases that mitigated employment gains.
Tariffs can also cause repercussions in foreign trade relations. As the world’s largest steel producer, and the target of Trump’s criticism, China has much to lose if these tariffs are implemented (World Steel). But countries such as India, South Korea and Japan also have much at stake with large steel industries of their own (The Balance).
Tariffs effect on jobs
- Peterson Institute of International Economics, a non partisan think-tank on global trade, found that roughly 1,200 American jobs were saved when the Obama Administration implemented a 35 percent tariff in 2010-2011 on Chinese tire imports. But the move also hit those consumers buying tires, costing an additional $1.1 billion that year.
- Some background reading: Paul Bairoch, a French post-war economic historian, argued in his book Economics and World History that the use of protectionist policies is how countries develop their economies. Today’s developed nations first built their economies on tariffs which were imposed before World War II. Today’s developing countries face a more globalized and more competitive marketplace.
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Tariffs effect on foreign policy
- Imposing tariffs can trigger “trade wars” with the countries affected. The Obama administration’s move to place tariffs on Chinese tires, for example, may have caused Beijing to impose an anti-dumping measure on chicken parts from the U.S. American poultry farmers benefit from bulk-selling chicken feet and wings to China.
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The world responds
- A spokesperson for the IMF expressed the organization’s concern that tariffs are “likely to cause damage not only outside the U.S., but also to the U.S. economy itself,” and encouraged Trump to avoid such “emergency measures.”
- Canadian Prime Minister Justin Trudeau denounced the tariffs as “unacceptable” and told reporters that he was “confident we’re going to continue to be able to defend Canadian industry.”
- The head of the World Trade Organization said he was “deeply concerned” that the tariffs risked creating a trade war that is “in no one’s interests” (New York Times).
- A German government spokesperson also told a news conference that a trade war “cannot be in anybody’s interests.”
- A Chinese government spokesperson warned that it would take “necessary measures” if its trade interests were put at risk.
- UK Prime Minister Theresa May spoke to Trump by phone, expressing her “deep concern” about the risk of a trade war, according to her office.
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