Yesterday can be considered as the official start date for a global trade war. The United States versus the rest of the world, that’s what it looks like. Even their close partner Canada has already been massively neglected. Donald Trump sets the starting point now.
Trade war starts with Steel and Aluminum
In a proclamation he gave two concrete figures. For steel imports there will be a general penalty of 25% on the US side and 10% for aluminum. According to Trump’s statements, they should apply indefinitely. They would apply to a “long time”. These penalties are now being written down so that they can enter into force quickly, Trump said. This will of course be good for US jobs in these areas in the short term, and also for the shares of these US manufacturers. Similarly, foreign companies are likely to think more about producing more products in the US, rather than shipping preliminary products from their parent plants abroad to the US.
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) March 1, 2018
The disadvantaged US workers
Donald Trump’s tweet makes it clear. The US and especially the US workers were oppressed and disadvantaged, according to his point of view. By this he means superficially the foreign manufacturers who have made the poor US workers unemployed with cheap products in all areas. But he is also subliminal in his attacks on the previous governments, which have watched this actionlessly. The message is clear. Dear US workers, look here. Bill Clinton, Bush and Obama didn’t do anything for you, they let you down. I’ll do something for you, specifically. And in the short term, such tariffs should indeed create more jobs in the United States in some areas.
But in the long run, however, other areas are likely to suffer, which should mean at least a zero-sum game for US jobs. Especially the rural constituencies of Donald Trump are likely to notice this soon. The Chinese have already hinted that they want to implement import duties for US agricultural products when the Americans start the trade war. Recently, the EU has already indicated in concrete terms that it is prepared to react swiftly to US import duties. For example, the import of US motorcycles has already been mentioned (Harley Davidson). But that’s not all.
We don’t want to give you the full length of Donald Trump’s statements he made yesterday, but here we present an excerpt of the import duties announced yesterday. Anyone who reads this will be aware of the fact that the trade war starts, and from the US side it will probably not be only steel and aluminium!
THE PRESIDENT: Thank you very much everyone. We have with us the biggest steel companies in the United States. They used to be a lot bigger, but they’re going to be a lot bigger again.
And we have the big aluminum companies in the United States. And they’ve been very unfairly treated by bad policy, by bad trade deals, by other countries. They’ve been horribly treated by other countries, and they have not been properly represented. More importantly, because of that, workers in our country have not been properly represented.
So we’re going to build our steel industry back and we’re going to build our aluminum industry back. And I just want you to hear from a couple of the folks in the room. We’ll have a few speak.
But I might want to start with Dave Burritt from U.S. Steel. It was a massive company years ago, and got smaller and smaller and smaller. And Dave was with Caterpillar for 35 years —
MR. BURRITT: Thirty-three years, yeah.
THE PRESIDENT: Thirty-three years. And did a great job. They brought him in. He’s been there for a short while, and he wants to build it back up.
Dave, maybe you could say a little bit to the room and to the press about U.S. Steel and where they were, where they’re going, and what you think of what we’re going to do.
MR. BURRITT: Well, thank you, Mr. President.
THE PRESIDENT: Thank you.
MR. BURRITT: And thank you very much for your leadership on this issue. And also, Commerce Secretary, thank you, sir, very much. This is vital to the interests of the United States. This is our moment, and it’s really important that we get this right.
The alternatives that the Commerce Secretary presented were all good alternatives, and we trust your judgment, in terms of the ones to be selected. We believe that the leadership that this administration has shown on tax reform is simply outstanding. The elimination of bureaucracy is simply outstanding. We trust your judgment on this issue.
And having been somebody that has global views and believes in free trade, we know when it’s completely unfair. We are not protectionists. We want a level playing field. It’s for our employees; to support our customers. And when we get this right, it will be great for the United States of America. We have to get this done.
THE PRESIDENT: And for your company and for your workers and for so much else, even the security of our own nation.
MR. BURRITT: Absolutely.
THE PRESIDENT: You like the tariffs that we’re talking about. You like the tariffs where they won’t be dumping on our country. What they do is they dump massive amounts of product on our country, and it just kills — it destroys our companies and our jobs. And it’s been happening for so many years, and we are not the beneficiary.
You feel tariffs are the answer?
MR. BURRITT: Yes, sir. The transshipments that go on, which you are well aware of — we call it the Whac-A-Mole game. It’s time for Whac-A-Mole to end. It’s time for some fairness here. It’s past time.
THE PRESIDENT: People have no idea how badly our country has been treated by other countries, by people representing us that didn’t have a clue. Or if they did, then they should be ashamed of themselves because they’ve destroyed the steel industry, they’ve destroyed the aluminum industry, and other industries, frankly, when you look at all the plants, the car plants, automobile plants that moved down to Mexico for no reason whatsoever, except we didn’t know what we were doing.