US to impose trade tariffs on steel and aluminium imports
President Donald Trump has announced his intention to impose steep tariffs on steel (25%) and aluminium (10%) imports to counteract what he considers “unfair trade.”
During his presidential campaign, Trump expressed concern that foreign countries were dumping vast amounts of steel all over the US, essentially killing the nation’s steelworkers and steel companies. He has also stated that cheap imports from China are harming the viability of industry in the US.
The US steel industry is significantly weaker than it was at the turn of the millennium, following a slump after the 2008 financial crisis. In 2000 the US produced 112m tons of steel and employed 135,000 people. By 2016 those figures had fallen to 86.5m tons and 83,600 people.
The country is the world’s biggest importer of steel, bringing in four times more than it exports and is reliant on more than 100 nations for the alloy. Canada, the EU, and South Korea, are the top three suppliers, with China also featuring in the top 10.
A number of metal executives joined President Trump as he made his announcement; however, officials from US industries reliant on steel lobbied against the tariffs, fearing increased costs and resultant job losses from greater use of US-made metals.
After the announcement, the value of shares in American steel manufacturers jumped significantly. But, the move hit US markets negatively, with the Dow Jones down 1.7% at closing.
The response from the US’s allies was not positive. Canada’s Foreign Minister Chrystia Freedland called any tariffs “absolutely unacceptable,” while European Commission President Jean-Claude Juncker said the EU would react firmly and commensurately to defend its interests. China too said it would consider retaliatory measures against the US.
David H. Autor of MIT University recognizes that “[t]he costs and benefits of free trade are among the most contentious topics in economic policy” in his IZA World of Labor article on trade and labor markets.
He notes that “China’s rapid rise, while enormously positive for world welfare, has created identifiable losers in trade-impacted industries and the labor markets in which they are located.” To mitigate the harms and share the benefits of trade integration more broadly, he recommends that “policymakers should consider modernizing trade adjustment programs, providing wage insurance to displaced workers, and expanding the set of workers eligible for work-contingent wage support, such as the US Earned Income Tax Credit.”
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Contact a topic spokesperson.