Economists warn costs of US goods will increase
WASHINGTON DC: What are the potential consequences of a global trade war triggered by President Donald Trump’s decision to hit imports of steel, aluminium and other products with steep tariffs?
Economists warn the measures raise costs of inputs for goods produced in the United States, and increase prices of imports to consumers. But, the consequences can be more far-reaching as other countries retaliate, hitting the US and global economies.
Trump’s unilateral decision to impose import tariffs of 25 per cent on steel and 10 per cent on aluminium, is nearly certain to prompt US trading partners to retaliate, and file a trade dispute with the World Trade Organisation.
The European Union (EU) already announced it was preparing countermeasures for US products: Harley-Davidson, bourbon and Levi’s jeans.
“We will not sit idly when European industry and jobs are threatened,” said European Commission chief Jean-Claude Juncker.
China said it would adopt the “necessary measures” to defend its exporters, and had initiated an anti-dumping investigation on imports of US sorghum, and signalled it might target US soybeans.
Gregory Daco of Oxford Economics also said there was a risk other economies, like the EU, could impose their own steel restrictions to protect their markets from being flooded by metal that would have gone to the US.
Trade is a major contributor to global economic growth and the International Monetary Fund has repeatedly warned that protectionist policies could jeopardise the worldwide recovery.
Daco said the tariffs could start to impact US economic growth very soon, especially if retaliation ramped up.