Liam Fox seeks United Kingdom exception from U.S. steel tariffs

President Donald Trump on Thursday imposed a 25 percent tariff on imported steel and a 10 percent tariff on aluminum imports, which are set to go into effect in two weeks.

Trump has introduced a new strategic doctrine on trade, and though I have some reservations (I opposed the steel tariffs), it’s important we understand it and realistically assess its merits.

The conviction that a border open to the importation of cheap cars, steel, cheese and electricity is a threat to national welfare and/or security has been embedded in the global trade system since before the creation of the 1947 General Agreement on Tariffs and Trade (GATT).

Mr Tusk said: “When the President complains of too many tariffs between the European Union and the U.S., I can understand him”.

Do the math. While imported steel will cost more, imports will drop from one-third to one-fifth of all steel used here. The report, citing two sources which had spoken with the Trump administration, dovetails with an article in Politico which described the president’s insistence on big tariffs.

In recent days he has also widened his rhetoric against Europe to include more trade beyond steel, and said Monday that Commerce Secretary Wilbur Ross would speak to his counterparts to consider reducing tariffs that were “not fair to our farmers and manufacturers”.

The tariffs will affect a wide range of products, including high-tech gadgets, food, furniture and beverages. President Trump implemented the tariffs by executive action under Section 232 of a 1962 law originally created to restrict importation of goods on the grounds of national security. He says those tariffs will hit hard. Yes, tariffs are a tax but, it can be argued, a much better tax than taxing income. This doesn’t sound like the warm embrace of free trade. The EU has announced retaliatory measures directed at several unrelated USA exports, like Levi Strauss blue jeans. The U.S. gets clobbered at the WTO, just like it does at the United Nations. American farmers – many of whom have built whole business models around supplying soybeans, pork, and other staples to the Chinese market – will be especially vulnerable to retaliatory tariffs.

Yu Minhong, founder and chairman of US-listed tech education firm New Oriental, said the tariffs would have a negative impact on both U.S. and Chinese customers due to higher prices.

“Trump isn’t just threatening trade tariffs, he wants to tear up the entire global order”.

“We will have to protect our industry with rebalancing measures”, said Cecilia Malmstroem, the EU Trade Commissioner, who this week confirmed that EU states are finalizing a list of USA goods – from peanut butter to bourbon – to hit with retaliatory tariffs. Trump’s unilateralism will cause greater anger among trade partners, and thus is more likely to generate retaliation.

While that is not a lot for the economy as a whole, it would be painful for the individual industry.

“.The fear is the United States and China could hurt each other quite badly in a trade war”. His critics claim that his approach, however, will precipitate other countries to increase their tariffs, undermining the global trading system, at great harm to America.

If, as expected, big action against China is announced, China will nearly certainly take equally strong retaliatory action.

We also need to remember, tariffs were the policy of the Federal Government from the early 19th Century until WWII. Trump is seeking to mirror the tariffs imposed on goods from nations that have large tariffs against us.

The World Bank reports that China imposes more than twice the level of tariffs on USA products as the US does on China’s, and Mexico nearly three times.

When it comes to trade, there is little doubt that Mr. Trump has the bigger button.