The US president was very clear: the US is introducing a tariff of 25 percent on steel and 10 percent on aluminum. "We will introduce those tariffs next week" and they will be in place "for a long time", said Donald Trump. Likewise, he complained on Twitter that the state, American companies and their workers, will no longer tolerate being destroyed by "unfair trade and bad politics."
Almost immediately after it was announced, there was a fall in the world stock markets: the Dow Jones index fell on Wall Street by 1,7 percent, South Korea's Seng by 1,5 percent, Japan's Nikkei by 2,5 percent. Of course, this also applies to steel and aluminum products, such as cars. Toyota also announced that the tariff will "significantly damage" car manufacturers, as it will mean higher car prices for American customers.
Already ready countermeasures
However, the world of money worries even more because it is almost impossible for these Trump tariffs to pass without countermeasures from other countries. Although China took note of the American measure relatively calmly, Beijing nevertheless announced that it was "thinking" about limiting soybean imports from the USA.
The President of the European Commission, Jean-Claude Juncker, was more specific: "We will not stand idly by as our industry is affected by unfair measures that will threaten thousands of jobs in Europe." (WTO). "The European Union will make a decision and react appropriately to protect its own interests."
Few - or rather no one - in the world basically understands the last sentence of Trump's message that the US wants "free, fair and smart (Smart) trade!" - the latter is written in capital letters. Either "free trade" or tariffs are possible - which, by the way, is against WTO agreements. That is why the European Union is not only thinking about countermeasures, but the European Commissioner for Trade, Cecilia Malmström, is announcing the possibility of a lawsuit before the World Trade Organization.
An inevitable chain reaction
When it comes to European countermeasures, Juncker did not want to be specific. This could mean anything, from levies on the import of American Harley Davidson motorcycles and American bourbon, to tariffs on American potatoes and tomatoes - in other words, on ketchup and chips from well-known American manufacturers.
It is obvious that US tariffs on steel and aluminum would be fatal for completely different economic sectors and that this entire trade war would bring with it consequences that are difficult to predict. That's why the director of the International Monetary Fund, Christine Lagarde, calls for calming down passions, but at the same time warns China that it should reduce its excessive capacities of the steel industry.
When it comes to steel, the European producers' association Eurofer estimates that the American tariffs will lead to a drastic drop in European exports to the USA - the first estimates speak of a minus of 50 percent or more. On the other hand, although the US Secretary of Commerce Wilbur Ross claims that Washington, in order to save jobs in the US industry, could only choose between introducing tariffs or setting import quotas for countries such as China, Mexico, South Korea or Russia, other US studies show that such a measure will essentially do little to help American workers.
In a study by the American Business Association, it is stated that between 1962 and 2005, three-quarters of jobs were eliminated in the American steel industry, and this trend continued after 2005. However, productivity in that sector increased by as much as five times for each worker: "Therefore, even if measures to protect the domestic market could lead to increased production, the increase in the number of employees could be far less than many hope," according to a study published by the EconoFact agency.
(Deutsche Welle)
See more:
Download the app and follow the news
FOLLOW US ON
