A report that was recently published on the news website Axios provided new details on Trump’s new drastic proposals on trade that could easily ignite an international trade fight between major global economies. Although many experts feel that the White House is merely testing the waters trying to see the kind of reaction this move will generate, there is no doubt that this is something that may as well happen sooner than we think. According to the report, it’s believed that Trump and top members of his administration are considering a significant tariff on all the major exporters of steel.
A tax of about 20% is being proposed. The tariffs will, however, not be limited to steel alone. Other goods such as large consumer electronics, aluminum, paper, and semiconductors will be targeted. The report also noted that according to the discussions that were held on Thursday night at the White House, 22 members present were opposed to the tariffs. Only 3 were willing to get onboard, including the President himself. The plan was also backed by Steve Bannon, the Chief Strategist at the White House as well as the Commerce Secretary Wilbur Ross.
Analysts told the President that while the trade tariffs aimed to punish China would do exactly that, in the process, they would also affect major US allies including Japan, the UK, Canada, Mexico, and Germany. In addition to this, there are reports that even though nearly 3/4 of the people present during the discussions told the President that the tariffs would be a bad idea, the President remained upbeat and supportive in what he felt could be a great move in exciting his support base.
Trump has been critical of US trade policies and he has made his discontent clear on Twitter a number of times. The President tweeted on Monday that the US had “made some of the worst trade deals in history.” From such a tone, it was clear that he was keen on changing this to what he sees as a fair deal to the country. But it’s not as easy as it looks.
The White House did not respond to the report saying that the President had yet to make his final decision on the matter. But analysts say that this could just be another tactic. It is believed that the discussions on the tariffs were leaked to the media as a way of testing the waters and see the kind of response such a move would elicit before making the official decision. However, it will not be a surprise if the President moves forward with the tariffs.
The law allows the President to impose tariffs on steel imports on the guise of national security interests. But the challenge is simple; most of the steel that comes into the US is exported from friendly countries such as Japan, the UK, Canada and South Korea. In addition to this, economists have argued that such tariffs would reduce the competitiveness of US firms on a global spectrum. It will be interesting to see whether President Trump will show restraint on this one but it won’t be surprising if he moves on with it.