White House has announced exemptions to some countries on metal tariffs imports on grounds of national security. The stance will be softened for only 30 days. President Trump outlined that the steel will have 25% tariff while aluminium goods will have 10%. China has taken a tough stance and threatened to respond in equal proportions in case of a trade war with the US. EU has responded with reciprocating measures on a line of goods from the US.
President Trump has, however, stated some waive-offs for Mexico, Canada and some other countries due to national security and has pointed towards a new North American Free Trade Agreement. Mexico and Canada are major suppliers of steel to the US. Trump has always rallied against US trade deficit and has been a loud advocate of other nations taking advantage of US since decades. Even in his election promises he had promised to rebuild US steel and aluminium industries which had suffered a lot due to cheap Chinese imports. President, however, dismissed all concerns that the action could lead to a trade war.
The move has led to serious jerks to worldwide stock markets. Tariffs will fail to protect US jobs and will lead to a rise in prices for consumers. Christine Lagarde the Chief of International Monetary Fund has stated that nobody wins in a trade war. Major businesses have also joined the anti-tariff voices. President of US Chamber of Commerce, Tom Donohue has stated that the new tariffs will only harm American manufacturers and instigate public discontent from major business partners and the real problem of Chinese steel and aluminium overcapacity will not be addressed. In addition, the new tariffs will also hit the long-term global allies of US.
There have been similar voices raised by the Grocery Manufacturers Association, which states that the import taxes will hamper and interrupt global supply chains and pass the burden on consumers. Likewise, the American Institute of Architects has stated that the costs of building materials will shoot up thereby shadowing the President’s Infrastructure proposal. The tariffs will have a relatively meagre effect on the $20 trillion economy which is running at full employment. However, the retaliation of EU, China and Canada can lead to a global conflict of high stakes.