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Is a trade war looming?

comercio aluminoo EEUU“Trade wars are good, and easy to win” stated Trump on his Twitter account, confirming analysts worst fears.

With the announcement that the United States is set to raise taxes on steel and aluminum imports, the Donald Trump administration might has just launched the first bomb of a trade war with unpredictable consequences.

Following an intense White House meeting – it was reported that some of Trumps’ closest advisors categorically oppose the measure – the President announced he would impose duties of 25% on imported steel and 10% on aluminum imports.

The United States is one of biggest purchasers of steel and aluminum worldwide. Last year, according to Reuters, the country acquired around 36 million tons of steel from a hundred or so countries.

Trump intends to impose duties of 25% on imported steel and 10% on aluminum imports. Photo: Getty Images
Trump tried to justify the measure claiming that the current state of the national steel industry poses a threat to national security, given the rise of emerging powers like China.

However, Canada and South Korea, both stanch allies of Washington and two of the biggest suppliers of steel to the U.S. could also be affected; while Brazil and Mexico are the Latin American countries that are set to suffer the most damage.

Although it has continually subsidized strategic sectors like agriculture and the military industry, over recent years the United States has been one of main defenders of free trade.

The protectionist rhetoric however, entered the White House with the arrival of Trump and his “America first” discourse. Although many believed that his message was intended more to win the election than actually reshape the country’s economic policy maintained by the Republicans and Democrats since WWII, the recent announcements show that the President is ready and willing to take concrete action.

The rise of rival powers such as China and Russia, and what President Trump calls “unfair trade” practices with allied nations, seem to have convinced some in Washington of the need to change the rules of the game.

However, experts agree that it will be difficult for Trump to maneuver in the tangled system of international trade without exposing himself to a trade war.

For example, Jean-Claude Juncker, President of the European Commission described the new tariff plan as “a blatant intervention to protect US domestic industry,” promising countermeasures by the bloc if Trump goes ahead with his decision.


China, supposedly the source of Trump’s concern, also has a few cards up its sleeve to offset U.S. markets, with Beijing stating that it will “take necessary measures to safeguard its legitimate rights and interests.”

On March 2, Trump confirmed analysts’ worst fears after posting the message: “Trade wars are good, and easy to win” on his Twitter account.

On March 5 however, the U.S President made another announcement which could explain his reckless policy, stating that he would be willing to review tariffs if a new and “fair” North American Free Trade Agreement (NAFTA) is signed with Mexico and Canada.

Although the president claims that his actions come in response to the United States’ geopolitical confrontation with China, the move could also be seen as an attempt to extract concessions from its neighbors, at a time when the almost 30 year-old trade agreement is be renegotiated and Washington is claiming that it has large trade deficits with the two nations.

In any case, if the measure is eventually implemented, the changes will have an immediate impact on the price of steel and aluminum in the U.S., benefiting national producers, but harming the rest of the industry which depends on such materials to manufacture aircrafts, cars, and even cell phones and household appliances.

The last time Washington applied a similar measure was in 2002, during the George W. Bush administration, which saw around 200,000 industry workers lose their jobs. The Republican President reversed the measure less than two years later.

However, a contradiction exists between the economic thought which has predominated in United States since 1945 and the country’s protectionist actions. Experts meanwhile, blame the trade war – which occurred from the end of the WWI through the start of WWII – for worsening the Great Depression in the 1930s and are advising not to make the same mistake again.


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