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Mar 09, 2018, 15:02
Trade war. Trump retaliates

Trump’s ‘America First’ policy turned another page in the trade history of the world. The tariff rate on the steel imports has been levied at 25 per cent and on aluminium imports has been imposed at 10 per cent. The taxes levied are being justified on the grounds of national security and are being presented as a key part of Trump’s policy to protect the American business and businessmen.


Though the tariffs are being rationalised by adhering it to country’s progress, Trump’s repetitive accusations of unfair trade and prices cannot be neglected. If understood completely the action is in continuance to the 30 per cent import duty on Chinese solar panel and washing machine exports.


Trump had initiated his retaliation against China in his campaign rally in Pittsburgh in April 2016 in his speech “China is dumping steel all over the United States of America, okay? It’s killing you, maybe we get a little lower price, but we lose all the jobs.”


United States goods and services trade with China was worth $648.5 billion in 2016 out of which exports accounted for only $169.8 billion whereas the imports were $478.8 billion which is 73.83 per cent of the total trade between the nations. China is amongst the top 4 aluminium exporters for America along with Canada, Russia and United Arab Emirates.


China has been listed as the world’s biggest steel producer for 2016 with a produce of 1.63 billion tons. Though China is the biggest producer its contribution to US imports has been minimal. The Chinese GDP is worth $ 11 trillion of which the steel exports to United States of America is only 0.01 percent and aluminium is 0.03%, when combined the two have a contribution of less than 0.2 per cent. China being the primary target for this revamp America seems to have missed the bull’s eye.


Though China is the biggest steel producer and a prominent aluminium exporter the exports to the US economy are to a lesser degree and the decision of imposing theses tariffs can only backfire judging from the prevailing scenario.



But this has not been the first time where the Trump rule has tried to hit the Chinese economy, last month anti-dumping and countervailing duties were levied on the aluminium foil exports of China into America. The dumping margins are ranging from 48.64% to 106.09% and the anti-subsidy rates varying from 17.14% to 80.97%.


There has been peace from the Chinese as if yet but if they choose to retaliate and impose punishing tariffs; the United States is going to have a tough time. Also companies like Apple and Intel having their major operations in China will be bound to suffer in the mess created by the President of America.


Though the repercussion of this could be fatal not only to the American economy but to the global economy as a whole. The tariffs have been implemented on the basis of the 232 section investigation reports, which allow the President to impose tariffs, quotas or a hybrid tariff-quota solution.


This has given initiation to the other nations to impose tariffs under the disguise of national security and get away with it. If the method is adopted by other countries, it could result in a civil trade war across the globe and could damage the existing trade relations between the nations which have taken centuries to be developed.


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