Declaring that the introduction of a 25 percent tariff on steel and a 10 percent tariff on aluminium will mean that “the era of economic surrender is totally over”, Trump has pledged that such changes will mean expansion for US companies, and a strong enforcement of trade rules to protect American workers. Critics have warned that this move will cost jobs for American workers and raise the prices of imported products.
The President originally promised to protect these industries in his campaign, but, not for the first time, Trump is going directly against warnings from his own advisers, including House Speaker Paul Ryan, who has desperately urged the President to “consider the unintended consequences of this idea.” However, the policy should hardly come as a surprise, given Trumps longstanding dedication to tariffs, which formed a central plank of his pitch to the rust-belt states during the 2016 election, specifically to bring manufacturing jobs back to the USA.
The announcement was similarly met with global fears of a plummeting stock market and a trade war, causing a fiery divide within the Trump administration. The President’s chief economic adviser Gary Cohn has lobbied strongly against the idea, and resigned this week in protest. He is the latest in a long line of Trump advisors to leave the White House over policy differences.
Looking forward to 3:30 P.M. meeting today at the White House. We have to protect & build our Steel and Aluminum Industries while at the same time showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military.
— Donald J. Trump (@realDonaldTrump) March 8, 2018
Since Trump’s decision was made, these fears have become increasingly real. Just hours after the announcement, the stock market was rattled, with the DOW, a stock market index that measures the trade success of some of the largest publicly owned US companies, taking a substantial dip. Not only will this be the most wide-reaching trade action that Trump has announced to date, but the Wall Street Journal have even reported that this is in fact the “biggest policy blunder” of Trump’s presidency.
Retaliation towards the increasingly protectionist trade policy from countries around the world has since escalated towards a trade war. Whilst Jean-Claude Juncker, President of the European Commission, has announced that he “will not sit idly while our industry is hit with unfair measures”, countries such as India, Japan, Australia, and South Korea are among the many others to express very strong concerns. Prime Minister May also phoned the President to express her concern with the tariff policy, which threatens a potential post-Brexit USA-UK trade deal.
We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!
— Donald J. Trump (@realDonaldTrump) March 5, 2018
Despite the various warnings, Trump is sticking with his instincts, controversially tweeting that “Trade Wars are good, and easy to Win”. Not only is the President currently readying a decision to impose the tariffs, and ignoring advice to exempt steel-producing allies from the tariffs, but as part of a long-running attack on the North Atlantic Free Trade Agreement (NAFTA), Trump has threatened to leave NAFTA if partner countries Mexico and Canada do not agree. This could have a hugely damaging effect on the US manufacturing industry, which sells overwhelmingly to Canada and Mexico. However, Trump blames NAFTA and other trade deals for making the sector uncompetitive domestically.
Adding to the growing list of controversial announcements that have been made under Trump’s presidency so far, this decision continues to spark uncertainty across the globe.