Trade war unleashed as US imposes tariffs
On March 9, US President Donald Trump imposed heavy tariffs on imported steel and aluminum items, from invoking an obscure bit of US trade law known as Section 232 to argue that the US needs to block foreign steel and aluminum exports and boost domestic production in order to protect its national security needs.
Trump imposed 10 per cent tariff on steel and 25 per cent tariff on aluminum from the European Union, Mexico, and Canada. And he had imposed those same tariffs on Japan in March. This sparked fears of a global trade war. The move marked a blow to the transatlantic alliance.
In response leaders from Europe, Mexico, Canada challenged the tariffs at the World Trade Organisation (WTO) and announced their own retaliatory levies on American goods. India had repeatedly requested an exemption from these tariffs as it did not pose a security threat to the US, but to no avail.
India has now submitted a revised list of 30 items — including motorcycle, certain iron and steel goods, boric acid and lentils — to the WTO on which it proposes to raise customs duty by up to 50 per cent.
When the US attempted to impose steel tariffs in 2002 under then-President George W. Bush, the EU held off moving to impose retaliatory tariffs until the WTO ruled in its favor in 2003. But, the longer the trade war goes on, the greater the cost as growth slows down under the increasing burden of taxes. The only gainers in the trade war will be the US steel industry.