Risks of Trump’s plan to slap tariffs on steel imports
USA, Washington D.C.: U.S. President Donald Trump has promised to suppress unfair foreign trade and restore the fortunes of American manufacturing, such as steelmaking. But will his pledge help domestic mills by restricting foreign steel and boosting U.S. steel prices is a question posed by the U.S. media.
According to Los Angeles Times, that same action will almost certainly lead to higher costs for American manufacturers which cut, bend and otherwise fabricate steel. Also, analysts do not think that tariffs will address the key problem — excess steel output in China that has caused a global oversupply and downward pressure on prices.
Two months ago, Trump ordered a study of foreign steel shipments, whose findings and recommendations are soon to be issued, giving him the green light to put the “America first” policy into action. The U.S. analysts and media fear that this time tariffs on steel imports, which Trump believes constitute a threat to U.S. national security, could carry greater political and economic risk.
Steel imports accounted for about 25% of the metal used in the U.S. last year. Analysts note that U.S. steel mills currently churn out more than what’s needed for the Defense Department. Commerce Secretary Wilbur Ross highlighted that the country has just one domestic maker of transformers, an essential part needed for the nation’s electrical grid, which he believes constitutes a “legitimate national security issue,” reports Los Angeles Times.
Another fear is that should Trump put an end to steel imports, other countries could strike back by taking similar action on American goods.
Most of the steel imports in the U.S. come from countries that have long been among America’s closest allies, including Canada, South Korea, Japan, Germany, France, Britain and Australia.
The U.S. already has in place some tariffs on various steel from China and some other countries, for selling products below cost or with the unfair benefit of government subsidies. As a result, steel from China accounted for just 3% of total U.S. steel imports last year.
Source: Los Angeles Times