Last week, President Trump announced that he would put a tariff on steel and aluminum imports. In other words, steel and aluminum purchased outside of the United States would now cost a bit more—twenty-five percent more for steel and ten percent more for aluminum—ouch! But why a tariff and why now?
President Trump wants to protect the US steel industry and says, “Steel is steel. You don’t have steel, you don’t have a country.” What does he mean exactly? Well, the US uses a lot of steel and aluminum to build things like skyscrapers, cars, airplanes, and ships, but most of that steel and aluminum is imported from other countries. As a result, US steel manufacturers have suffered. But why buy from other countries when you can buy steel locally? The simple answer: It’s cheaper. President Trump wants to change that and make it a more even playing field. A tariff on steel and aluminum imports would certainly allow US steel manufacturers to compete with international companies, and as a result, they could hire hundreds of employees to get the job done. Wonderful, right?
“Steel is steel. You don’t have steel, you don’t have a country.”
That’s the idea, at least, but let’s look at the bigger picture of when a tariff is imposed on an imported good. The United States is a heavy importer of steel, but it is also a heavy exporter of goods. Since President Trump’s announcement, both the European Union and countries in Asia have been thinking about adding tariffs on goods imported from the United States. So, who ultimately suffers from a trade war? Consumers, or people who buy things. Consumers will suffer from higher prices because the tariffs, or taxes, will be pushed onto consumers. What else? The US imports most of its steel and aluminum from Canada and Mexico, two allies. President Trump’s own Republican party has warned him of the consequences of adding a tariff on imported goods from allies. Slap a tariff on goods from those who support you during war and disaster? That might not be the best move. You see, the world is like a chess board. You can’t make a move without facing potential consequences.
For the time being, President Trump said that Canada and Mexico are exempt from the tariff (or won’t have to pay the tariff) and that other countries might be exempt as well—he’ll decide on a case-by-case basis. So, is a tariff on imported steel and aluminum the right move? US steel manufacturers sure think so, but we’re not quite sure everyone else agrees.
What do you think? Did President Trump make the right move by ordering a tariff on imported steel and aluminum? Are there other ways to help the steel industry without starting a possible trade war?