Trump’s Next Tariff Plan is on Steel and Aluminum

On Thursday, President Trump said that he is planning on imposing stiff tariffs on steel and aluminum imports against the suggestions of some of his top pro-trade advisors. As the prospect of a global trade fight loomed, this move proposed by Trump will also disturb the stock markets tremendously.

President Trump stated that he would officially sign the trade measure by next week, promising that they would stay in place for an extended period of time, including tariffs of 25 percent on steel and 10 percent on aluminum. Trump plans to apply these tariffs to all countries, as if one country is allowed to be exempt from the tariff, other countries would demand similar treatment, leading for complications. He also mentioned that should a country be exempt, the metals could be potentially be shipped to the United States through that country.

This trade measure is a result of a Commerce Department investigation, which reached the conclusion that imported metals poses a threat to national security and degrades the industrial base of the US. Trump responded to this conclusion of this investigation by stating that the people and industry of US have been negatively impacted by the steel and aluminum industry while unaware of it.

Trump has requested a good number of executives of the steel and aluminum industry to the White House and confirmed the anticipation of his promised tariffs. His advisors have been divided over how to handle the tariffs, debating between whether to impose them on all steel and aluminum imports and to tailor them more specifically to specific countries. While the first could lead to tensions with allies including the European Union and Canada, the latter could also ensnare contention.

The legal review of the measure also has not yet been completed as White House advisers were still deciding between different tariff levels and the lists of countries to be included.

Recently, there has been a group of advisers who advocate for tougher, stricter stance on trade and become more skeptical of the current steel industry. Spearheading the project is Robert E. Lighthizer, the country’s top negotiator, joined by Peter Navarro, a trade skeptic and former industry lawyer.

This announcement of this trade measure has triggered a few repercussions already. Stocks have already fallen significantly, in particular with declines in the industrial sector. The 500 industrial sector of Standard & Poor was down by 2%, while large consumers of steel and aluminum, including Boeing and American automakers, have also declined.

However, The sales of these firms could be vulnerable for further decline as other countries retaliate against the US tariffs. Even though this sanction would up President Trump’s credibility and fulfill one of his key campaign promises, it could also trigger trade wars globally. Foreign governments, as well as multinational companies, have continuously been opponents of trade measures, claiming that tariffs disturb and threaten economic and security ties.

Tariffs are faced with not only public opinion, but also divided industries, workers and even policymakers. Manufacturers of steel and aluminum have been taking up initiative to push against imports at lower prices, while companies that use steel and aluminum have protested that the tariffs would increase the costs of their productions and lead to potential price raise, which will be ultimately covered by the consumers or the workers themselves.

Roy Hardy, the president of the Precision Metalforming Association, has argued that people employed by companies using steel and aluminum outweigh those employed by the industries themselves, pointing to the flaw in the logic of this proposal.

The stakes are high for these tariffs. Foreign competitors, domestic firms, companies that rely on on steel and aluminum, trade lawyers and consumers are all anxiously anticipating the repercussions that will ensue them.

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