Alfonso Llanes, Master Degree in International Development
The losers in this action by Trump will be the industries that depend on steel and aluminum which will face higher prices. That means some of the nation’s largest industries: automobile, aircraft, heavy machinery and heavy equipment manufacturing industries. These manufacturers that use steel and aluminum for their products are significantly larger than are steel and aluminum producers.
Statistically, steel imports are only about one-third of what US industry needs and so, the tariff would not apply to domestic steel production. Aluminum is a different matter for only 10 percent is produced domestically.
The World Trade Organization (WTO) agreement states that countries are free to take actions they consider critical to their security interests. However, WTO members are very cautious about using this provision because of the dire consequences to trade and the implications it can provoke. It follows that China, India, Brazil and other countries are just as capable of making such fake claims based on similar national security rationales for restricting imports.
The provision of law that Trump is relying on for the imposition of this new tariffs is “Section 232 of the Trade Expansion Act of 1962 which allows imports to be blocked on national security grounds.”
Previous administrations had interpreted the provision narrowly, requiring evidence that the military needs or strategic industries could not be supplied by U.S. production. The US Commerce Department under Trump is disregarding a half century of precedent by finding that steel imports coming from the most-trusted U.S. allies, such as Canada and the EU need be taxed.
The risk assessment of Trump’s action is hard to quantify for the affected countries can easily retaliate by imposing tariffs on American goods. Moreover, tariffs could be imposed on targeted goods in order to cause economic and political sting. American exporters of all economic sectors should be weary of steps that might follow whether they are exporters of agricultural products or aerospace vehicles for once wars is started it is impossible to predict how it will end as history indicates from the 1930′s world economy experience.
The invocation of national security concerns by Trump could be used as a precedent in which other nations might be willing to use national security as grounds for tariffs, and thus, neutralizing the ability of the World Trade Organization to arbitrate disputes. The real risk is that an entire system of global trade which the United States was point in building after WWII might be under peril.
“In 2002 President George W. Bush imposed tariffs on steel imports, only to reverse them in 2003 after the WTO ruled they were illegal. The WTO ruling left the U.S. vulnerable to $2 billion in sanctions on U.S. exports.”
“It was once said that Britain lost its empire in a fit of absent-mindedness; the United States, now appears, it could lose its own in a fit of Donald Trump’s impulsiveness.”
Experienced generals well know that starting a war is not the issue but how it ends and at what cost in treasure and lives turns out to be. These are the questions that need be analyzed and evaluated before conflict actually starts. Whether a hot war or a trade war neither case is as easy as Trump claims it to be for our historical record indicates that wars in general have been started by either madness or stupidity.
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