The Trump Tariff Tangle: Unpacking the Impact of Steel and Aluminum Tariffs on the US Economy
In 2018, the Trump Administration implemented tariffs on imported steel and aluminum to protect domestic steel and aluminum producers from foreign competition.
The tariffs were set at 25% on imported steel and 10% on imported aluminum.
The decision was met with mixed reactions, with some supporters arguing that it would help revive the struggling domestic steel and aluminum industries and reduce the trade deficit. During this, critics warned of higher consumer prices and potential retaliation from other countries.
The tariffs were implemented under Section 232 of the Expansion Trade Act of 1962, allowing the President to impose tariffs on imported goods if they were determined to threaten national security. The Administration argued that the tariffs were necessary to protect the domestic steel and aluminum industries, which were critical to national security.
Tariffs also increased steel and aluminum prices for American manufacturers, who rely on these materials to produce goods such as cars, appliances, and construction equipment. This increase in prices led to a rise in the cost of goods, which increased the cost of living for consumers. Companies that were heavily dependent on these materials were forced to look for alternatives or move their operations to other countries where the price of the materials was lower.
These tariffs were met with widespread opposition from trading partners, businesses, and lawmakers. Several countries, including Canada, Mexico, and the European Union, responded with their tariffs on American goods. This led to a trade dispute between the United States and several of its major trading partners.
In 2019, the Trump Administration announced that it had reached agreements with several countries, including Canada, Mexico, and South Korea, to limit their steel and aluminum exports to the United States in exchange for removing the tariffs on those countries. However, tariffs on other countries, such as China, which was not part of this agreement, remained in effect.
This decision to impose tariffs on steel and aluminum was a clear example of how a trade policy can have wide-ranging economic implications. While the goal of protecting domestic industries and creating jobs is commendable, the tariffs also increased the cost of living for consumers and businesses and uncertainty in trade. The tariffs also led to a domino effect on other industries and sectors affected by the increase in steel and aluminum prices.
It's worth mentioning that the tariffs also impacted the global economy, leading to a chain of retaliation from other countries and trade disputes. The tariffs also decreased trade between the US and other countries and the overall global economic growth.
Taxes on steel and aluminum imposed by the Trump Administration were a clear example of how trade policy can have wide-ranging economic implications. While the goal of protecting domestic industries and creating jobs is commendable, the tariffs also increased the cost of living for consumers and businesses and uncertainty in trade. The tariffs also had a domino effect on other industries and sectors affected by the increase in steel and aluminum prices. Trade policies should be carefully crafted and evaluated to minimize the economy's and society's negative impacts.
As of Jan 19th, 2023
US businesses have called on the Biden administration to remove Trump-era tariffs on Chinese goods as the government considers a formal extension on the hundreds of billions of dollars in levies.
The Chamber of Commerce and the Information Technology Industry Council are among those that have submitted their thoughts during the Office of the US Trade Representative’s public comment period, which ended on Tuesday.
Many small businesses have also said that the duties have pushed their input costs. The tariffs on Chinese merchandise imports are a holdover from former President Donald Trump’s aggressive actions against Beijing after an investigation concluded that China stole intellectual property from American companies and forced them to transfer technology.
There is little indication that the White House is inclined to significantly roll back the tariffs, as President Joe Biden has kept them in place as leverage against what the US sees as its key strategic and economic rival and amid concerns that repealing them would be politically risky.