We all lose in Trump’s trade war
As president threatens 25% tariff on steel imports into us…
Donald Trump’s threatened steel tax risks lighting the touch paper on a global trade and tariff war. The US President’s vow to slap 25% duties on steel imports, and 10% on aluminium, has triggered an immediate response.
China says it will “not sit idly by”. The EU promises “proportionate” taxes on €2.8billion of US imports and US’S neighbour Canada, which has the most to lose, warns it would retaliate.
Mr Trump has confidently declared “trade wars are good, and easy to win”.
But Nobel-prize winning economist Robert Shiller struck a warning note. He called Mr Trump’s declaration the “first shot in a war and that’s what is worrisome. That’s what happened in the Great Depression.”
The President’s announcement came out of the blue, ahead of a
ON TRUMP WAR
meeting with the US steel industry, but was aimed squarely at his core supporters.
His Twitter messages were peppered with vows to “Make America Great Again” and “America First”.
But while he is gung-ho about a trade conflict, history and experts fear it will be ordinary people who will suffer most.
Prices would rise on all sides, hitting consumers hard in the pocket. This means they could buy less, trade suffers and a global economic depression is the ultimate outcome.
A number of firms have already warned tariffs will push up the cost of steel, which will be passed on.
Ford, General Motors and Campbell’s Soup rely on imports to make their goods as the US does not make enough steel. They have warned tariffs may force them to raise prices. But critics believe they may be bluffing and would take a hit to profits rather than lose sales.
The EU is drawing up a list of Us-made goods, from steel and agriculture to clothing, to target with retaliatory measures.
Jean-claude Juncker, President of the European Commission, said: “We cannot simply put our head in the sand.”
A “proportionate” 25% tariff could be added to Levi jeans, Jack Daniel’s whiskey, Jeeps, Harleydavidson motorbikes and even Sun-maid raisins.
The United States is a major goods exporter to Ireland, ranking second only to the UK.
American goods exports to Ireland include pharmaceutical products, electrical components and equipment, computers and peripherals, aircraft, and optical and medical instruments.
Mr Trump ramped-up the rhetoric by warning the US could impose stiff tariffs on European car makers.
Talk of a steel tax comes hot on the heels of the US approving controversial tariffs on imported washing machines and solar panels. The move was billed as protecting US manufacturers from foreign competition.
A steel levy would threaten some of America’s closest allies, including Canada, South Korea and Germany. China does not rank in the top 10 biggest steel exporters to the States.
Any hope of the UK steel industry being given special treatment appears to have been abandoned. About 15% of the industry exports were to the US, worth over €400million a year.
Mr Trump’s snub also raises doubts Britain could rely on the US for a free trade deal post-brexit.
But there are question marks over whether the trade war at the scale threatened will happen.
Mr Trump may think twice if working-class US families are hit. It may be blocked. A US trade commission rejected attempts to add 300% tariffs on imports of aircraft by Canadian firm Bombardier after a row with arch rival Boeing.
It is possible the dispute will be settled by the World Trade Organisation.
But the timing of Mr Trump’s threat is also interesting, coming partway through a bid to rewrite a trade deal with Canada and Mexico. He is using his country’s €14.6trillion economy as a battering ram to try to get what he wants. Will others call his bluff ?
This shot is worrisome, this is what happened in the Great Depression ECONOMIST ROBERT SHILLER