By Anuraag Srivastava
Donald Trump’s decision to impose import tariffs on steel and aluminium has caused quite a stir around the world. Donald Trump plans to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminium imports. This has raised the prospect of retaliatory measures from other countries, fuelling the fear of a trade war. The International Monetary Fund (IMF) and World Trade Organisation (WTO) joined several nations around the world to voice their concerns.
IMF and WTO concerns
An IMF spokesperson stated that “The import restrictions announced by the US President are likely to cause damage not only outside the US but also to the US economy itself.” The spokesperson went on to specify that, “We encourage the US and its trading partners to work constructively together to reduce trade barriers and to resolve trade disagreements without resort to such emergency measures.” The IMF pointed out the number of measures that America’s trading partners are planning to take once this decision is implemented. WTO Director-General Roberto Azevedo warned that “The potential for escalation is real as we have seen from the initial responses.”
Ever since the US President announced the move, other countries have been expressing their concern publicly. Canada, which is the largest supplier of steel to the US, contends that the tariffs will disrupt supplies on both sides of the border. Canada has vowed retaliatory measures if President Trump goes ahead with the plan. The European Union’s Trade Chief is reportedly considering a 25 percent tariff duty on the EU’s approximately $3.5bn worth of US imports. China, France, Brazil and Japan are among the other countries that have voiced their own reservations regarding the move.
Amidst all the furore, Donald Trump has instead taken the position that trade wars are good and easy to win. However, it is important to note that the WTO was established by the US and its allies for the very purpose of avoiding such circumstances. The WTO’s state purpose is to reduce trade barriers and to promote free trade. In fact, most countries would agree that any dispute between nations regarding trade should be settled using the rules-based system the WTO provides. By imposing these tariffs, Donald Trump not only invites retaliatory measures from the world in the form of more trade barriers but such a policy would also directly contradict the very economic principles that the US has stood by for so long.
Trump unlikely to back down
Donald Trump, however, is merely continuing the rhetoric he used throughout his election campaign, which centred on Americans losing jobs to foreigners. It is unlikely that he will backtrack on the latest tariffs considering that most of his voter base will approve of the move. This is especially true for the steelworkers of Pennsylvania and Indiana, who are concerned about their own jobs to worry about the larger economy. Indiana and Pennsylvania also are among the states that Trump unexpectedly won in the 2016 elections. Thus it is unlikely that any warnings by the IMF or WTO will help to improve the situation.
Featured Image Source: Flickr
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