Last Thursday, the US President Donald trump said he intended to impose tariffs of 25 percent on imported steel and 10 percent on aluminum. While he claims these tariffs are for the good of the country, there are a lot of people (both inside the US and around the world) who are opposed to the move, and who warn the tariffs may have a negative impact on the American people. There are even members of the Republican Party who are opposed to the plan. As the US is currently the world's biggest steel importer, buying 35.6 million tonnes in 2017, it's easy to see why the proposed tariffs have become such big news.
Why is Trump introducing these tariffs?
Trump says his proposed aluminum and steel tariffs are about putting America first and protecting national security. The purpose of the plan, according to Trump, is to safeguard American jobs in the face of cheaper foreign products.
How will these tariffs affect the American people?
The levies are said to hit the auto and aerospace industries hardest, but it's also likely that they'll affect a number of everyday items including beer, soft drinks, candy, canned soup, electronics, construction equipment, and even packaging for pharmaceuticals like wrappers and blister packs. According to Bloomberg Intelligence, containers and packaging make up about 18 percent of aluminum consumption in the US.
Matthew Shay, Chief Executive Officer of the National Retail Federation, says the higher costs of these products may force the companies that make those products to increase prices for everyone. For example, if the proposed tariff applies to finished products, Apple products could go up 0.2 percent.
Not only will the tariffs inflate prices for US citizens, but they could have an impact on jobs available in the affected industries.
According to Molson Coors Brewing Co. and Anheuser-Busch InBervNV, two of the largest brewers in the US, around 2 million jobs depend on America’s beer industry.
How will the tariffs affect the world?
Trump has said the tariffs will affect all countries, without exception, which has sparked a number of other countries to propose their own tariffs.
The European Union led the way in retaliating against the proposed levies, stating that they'll impose tariffs of their own on products like Harley-Davidson, bourbon and Levi's. Other countries now considering initiating tariffs include Canada, China, Japan, and Mexico.
But don't panic just yet...
The details of how these tariffs will be rolled out are still to be determined, and much depends on whether they apply to raw materials or finished products.
With details of the plan being formally announced next week, the world (in particular, the World Trade Organisation) will be waiting and watching Trump's moves carefully.
While a Washington policy research group, Capital Alpha Partner, says a quick reversal or changes to the proposed tariffs is highly unlikely at this stage, they remain hopeful that once enacted, the policy could be modified.
If you're interested in learning more about this topic, another Blaster has covered it here. Trump is also in the news at the moment for having a public meltdown on Twitter in reaction to Alec Baldwin's latest impersonation of the President on SNL. Discover the details here.
