Another week as the president and another controversy, and this time it seems that Donald Trump is ready to take on the world single-handedly. The American president announced last week, that he would be imposing 25 percent tariff on steel and aluminum imports to try and solve a problem that has been hampering growth in the USA and costing people jobs. China is the largest importer of steel and aluminum in the US.
They sell the materials well below production cost and, according to Trump, this has been the major reason for the sluggish growth of industries which has cost America dearly in the past. However, the world's reaction to Trump's announcement only left the White House in a pickle who now face an impossible task of making Trump realize that his decision has much more cons than pros.
Are we heading to a Trade War?
Trump's decision was not received well by the world and the European Union was the first to react to the decision. European Union leader Jean-Claude Juncker issued a strong statement against Trump's decision threatening to increase taxes on beef, corn, pork, liquor, motorcycles, and cars.
China, Canada, and Mexico were in agreement with the European Union and chose to take a stand against Trump.
It was not just the external world that was against Trump's decision, unions within the United States urged the president to rethink his decision as it could cost more jobs and would not likely solve the problem of sluggish growth.
The impact of Trump's decision
The immediate impact of Trump's decision was seen, in a matter of hours, when the Dow slid down 600 points costing investors millions of dollars. This might be the least harmful outcome if Trump goes through with the decision. It would adversely affect the automobile industry which is already struggling to find it's footing in these uncertain times.
The other industries that would see a steep fall in revenue would be the beer, machinery, and boat industry all of which utilize steel and aluminum in bulk. According to an estimate released by the boating industry, the industry manufactures about 111,000 aluminum boats every year which makes up 43 percent of their sales. This huge figure would not only impact jobs in the boating industry and fields linked to it namely the engine and spare part manufacturers.
Multiple US Business groups have come out strongly against Trump and have urged him to rethink his decision. The Business groups believe that the move would motivate other countries to impose heavy taxes on American goods and could even lead to a ban on American products in certain countries which would lead to a decline in the American economy.
This is not the end, everything from canned goods to electronics that utilize steel or aluminum would see a rise in their prices. This would eventually hurt the average citizen of the country. Even Trump's own party is against this decision, with Paul Ryan expressing his dismay in a press release, while Gary Cohn, the head of President Trump's National Economic Council, decided to quit yesterday and made his opinion about the decision known to the president.
Trump remains unfazed
Even after the mass protest on his decision, Donald Trump did not budge and continued to boast about his decision going as far as saying that winning trade wars is as easy as it gets. Trump, on the other hand, sees the increase in tariffs as a way to have his way in the North American Free Trade Agreement(NAFTA) with Canada and Mexico. The President stated that he would think of letting go of his decision on increasing the tariffs on steel and aluminum imports only if a new NAFTA agreement is signed.