By Alberto M. Burgos-Rivera
This blog post was written for the course "Current Issues in Global and EU Affairs", which took place February 12-April 30, 2018.
To many a political analyst, Trump’s tariff increase on both steel and aluminum imports, by 25 and 10 percent respectively, were to eventually come as part of President Donald Trump’s campaign promise. That promise came to take place in early March 2018. Riding on an economic nationalist platform, some of the arguments presented by President Trump were based on security concerns, arguing that domestic metal production was vital to the United States’ national security. On the other hand, President Trump argued that increased from states like China caused a worldwide decrease in steel prices, making American steel uncompetitive for the international market, hence, making the US dependent on foreign imports. Initially, the imposition of tariffs was to be applied to all countries.
With President Trump’s announcement of steel and aluminum tariffs came the immediate reaction of its allies in lobbying for an exemption for their imports. Initially, both Canada and Mexico successfully managed to become exempt from Trump’s tariffs. The issue became complicated when the EU found out its steel exports were also to be subject to tariffs. For instance, the EU questioned the US’s motive and stated that it would undermine transatlantic relationships. The EU did not pose a security threat to the United States, hence, there was no reason to impose tariffs on EU products. As a result, the EU almost immediately stated that it was ready to counteract by imposing tariffs on US products such as oranges, and Harley Davidson motorcycles. Despite the tariffs to be imposed in March, Trump granted an exemption on incoming steel and aluminum until May first.
At the beginning of May, however, the White House announced yet another, and possibly its last, extension on exemptions on steel and aluminum imports. It has been argued that the delays serve as a measure to force countries to negotiate individually with the US on trade. If the implementation of tariffs is considered to be a national security issue, then the EU has argued that it is not them whom the tariffs should be applied to but China since Chinese overproduction has caused a decrease in steel prices. On the other hand, the US has accused the EU’s policies of being highly protectionist and that such policies have greatly affected US farmers and carmakers.
It has been stated that the US decision to prolong the exemption only serves to prolong market uncertainty, which is already affecting market decisions. Despite EU steel and aluminum being temporarily exempt from tariffs, the Trump administration is mostly focused on imposing quotas that will restrain imports, prevent transshipment, and protect national security. While the EU has stated to be willing to negotiate trade agreements with, it has also stated that it I not willing to establish negotiations although not under threat.
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References
Lawder, David and Jeff Mason (2018, March 7) “Trump sets steel and aluminum tariffs but
exempts Canada, Mexico” Reuters.
Swanson, Ara (2018, March 1) “Trump to Impose Steel and Aluminum Tariffs”
The New York Times.
McAtee Cerbin, Carolyn (2018, March 23) “Trump exempts some allies from steel, aluminum
Tariffs” USA Today.
Cassella, Megan (2018, May 1) “Trump grants the EU extra month of relief from steel tariffs:
moves deadline to June 1” Politico.
Oliver, Christian (2018, May 1) “EU slams Trump for short delay on steel tariffs” Politico.
To many a political analyst, Trump’s tariff increase on both steel and aluminum imports, by 25 and 10 percent respectively, were to eventually come as part of President Donald Trump’s campaign promise. That promise came to take place in early March 2018. Riding on an economic nationalist platform, some of the arguments presented by President Trump were based on security concerns, arguing that domestic metal production was vital to the United States’ national security. On the other hand, President Trump argued that increased from states like China caused a worldwide decrease in steel prices, making American steel uncompetitive for the international market, hence, making the US dependent on foreign imports. Initially, the imposition of tariffs was to be applied to all countries.
With President Trump’s announcement of steel and aluminum tariffs came the immediate reaction of its allies in lobbying for an exemption for their imports. Initially, both Canada and Mexico successfully managed to become exempt from Trump’s tariffs. The issue became complicated when the EU found out its steel exports were also to be subject to tariffs. For instance, the EU questioned the US’s motive and stated that it would undermine transatlantic relationships. The EU did not pose a security threat to the United States, hence, there was no reason to impose tariffs on EU products. As a result, the EU almost immediately stated that it was ready to counteract by imposing tariffs on US products such as oranges, and Harley Davidson motorcycles. Despite the tariffs to be imposed in March, Trump granted an exemption on incoming steel and aluminum until May first.
At the beginning of May, however, the White House announced yet another, and possibly its last, extension on exemptions on steel and aluminum imports. It has been argued that the delays serve as a measure to force countries to negotiate individually with the US on trade. If the implementation of tariffs is considered to be a national security issue, then the EU has argued that it is not them whom the tariffs should be applied to but China since Chinese overproduction has caused a decrease in steel prices. On the other hand, the US has accused the EU’s policies of being highly protectionist and that such policies have greatly affected US farmers and carmakers.
It has been stated that the US decision to prolong the exemption only serves to prolong market uncertainty, which is already affecting market decisions. Despite EU steel and aluminum being temporarily exempt from tariffs, the Trump administration is mostly focused on imposing quotas that will restrain imports, prevent transshipment, and protect national security. While the EU has stated to be willing to negotiate trade agreements with, it has also stated that it I not willing to establish negotiations although not under threat.
---
References
Lawder, David and Jeff Mason (2018, March 7) “Trump sets steel and aluminum tariffs but
exempts Canada, Mexico” Reuters.
Swanson, Ara (2018, March 1) “Trump to Impose Steel and Aluminum Tariffs”
The New York Times.
McAtee Cerbin, Carolyn (2018, March 23) “Trump exempts some allies from steel, aluminum
Tariffs” USA Today.
Cassella, Megan (2018, May 1) “Trump grants the EU extra month of relief from steel tariffs:
moves deadline to June 1” Politico.
Oliver, Christian (2018, May 1) “EU slams Trump for short delay on steel tariffs” Politico.
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