President Donald Trump’s recent announcement of a 25% tariff on U.S. imported steel and a 10% tariff on imported aluminum has led to international concerns.
According to Reuters, the Trump administration has said that some countries (Mexico and Canada) will get exemptions from the tariffs, but the rest of the world could soon be hit with an oversupply of steel, aluminum, and other materials.
President Trump is attempting to justify the tariffs at the World Trade Organization (WTO), which polices agreed-upon free trade rules. Trump noted a “national security” clause under Section 232 of the 1962 U.S. Trade Expansion Act, the first time the clause has been invoked since the WTO was created in 1995.
The total yearly value of U.S. agricultural exports is worth approximately $139.8 billion, but if these steel and aluminum tariffs hinder international trade affairs, there could be some catastrophic problems striking the agricultural sector.
“Tariffs would be incredibly counterproductive,” added Josh Kallmer, senior Vice President at the Information Technology Industry Council.
Additional critics of the tariffs believe that they fail to meet the WTO’s safeguard agreement standard. Similarly, officials are expecting immediate retaliation from nations that are unfairly impacted by the tariffs, stating that these countries will be able to impose strict trade sanctions right away to balance out the financial damage done by the tariffs.
There are two different kinds of tariffs that can be levied on imported goods. A “unit” or specific tariff is a tax levied as a fixed charge for each unit of a product that is imported. Additionally, an “ad valorem” tariff is levied as a proportion of the value of important goods. Though there are some differenced between these two tariffs, they both act in similar ways.
Tariffs are actually one of the older instruments pertaining to trade policy — dating back to at least the 18th century. Throughout history, a tariff’s main objective was to increase revenue. Nowadays, however, tariffs are primarily used to protect certain domestic industries from foreign competition in addition to increasing revenue streams.
No matter what kind of goods are being shipped both to and from the U.S., the majority of these products are transported using the 6 million shipping containers that can be found throughout the globe. There are, however, approximately 11 million unused shipping containers that could be implemented for international importing and exporting, depending on the state of the global economy and foreign trade affairs.
Currently, out of all the tungsten available for scrapping, 66% of it was either used across the U.S. or exported for recycling purposes. China, the world’s leading tungsten consumer, could soon be the next nation that struggles to complete successful imports and exports with the United States.
According to The Wall Street Journal, President Trump is planning to implement trade measures against Beijing, China, which would include investment restrictions, visa limits, and technology transfer issues.
Trump previously stated that he wants Xi Jinping, the General Secretary of the Communist Party of China, President of the People’s Republic of China, and Chairman of the Central Military Commission, to slash the country’s trade surplus with the U.S. by $100 billion.
“Multilateral action is what’s absolutely necessary,” said James McGregor, the head of the China office of APCO Worldwide. “But when you are going around and attacking your trading partners, who is going to work with you?”
As far as steel is concerned, the 28 nations in the European Union produce 10% of the world’s steel, which is the second highest behind China at a significant 49%. Additionally, CNN Money showcased the rest of the global leaders in steel production:
- China — 49% of the world’s steel production.
- European Union — 10% of the world’s steel production.
- Japan — 6% of the world’s steel production.
- India — 6% of the world’s steel production.
- United States — 5% of the world’s steel production.
- South Korea — 4% of the world’s steel production.
- Russia — 4% of the world’s steel production.
- Turkey — 2% of the world’s steel production.
- Brazil — 2% of the world’s steel production.
- Other Nations — 11% of the world’s steel production.
Though the U.S. ranks fifth in terms of steel production, it remains the number one steel importer in the world. In 2017, the value of shipped steel coming into the U.S. was over $29 billion.
