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Metal tariffs prompt favorable trade deals for U.S.

In the wake of President Trump’s protectionist tariffs on steel and aluminum, countries are being forced to either bend their knee to American trade deals or be forced into a trade deficit. The tariff calls for a 25 percent  tax on steel, and 10 percent on aluminum. Mexico and Canada are exempt by default due to NAFTA (North American Free Trade Agreement), but many NATO (North Atlantic Treaty Organization) and East Asian countries have voiced their concern about the tariff to their domestic industries.

The tariff was created by a Trump administration that was concerned mainly by the influx of incredibly, and artificially, cheap steel coming from China.

South Korea’s Busan Port
Photo courtesy of Business Insider

For decades, world trade powers have accused China of “dumping,” the process of a government monetarily supporting national industry to create goods that sell substantially below market value. In doing this, they run competitors in the industry (such as companies in the U.S.) out of business because it is financially impossible compete. The entity that has engaged in dumping now has a monopoly on the market and free reign to jack up prices.

China has consistently denied these claims despite their steel exports increasing by 400 percent in the last decade. They have denounced the U.S. for inciting a trade war and vowed to retaliate in trade policy as a counter.

Another aspect of imposing a severe tariff such as this is that it incentivizes countries the U.S. trades with to negotiate a deal that benefits U.S. industry in order to be exempt from the import tax. Secretary of Treasury Steve Mnuchin has praised this aspect of the tariff for already working in the U.S.’s favor during an interview with the press.

“I think the strategy has worked, quite frankly. So we announced the tariff. We said we were going to proceed. But, again, we said we’d simultaneously negotiate,” Mnuchin said. “So, South Korea will reduce the amount of steel that they send into the United States as part of this.”

South Korea is one of the first to begin negotiations, and the deal they have reached includes provisions allowing the U.S. to increase automobile exports to the country. They are raising the cap on the number of cars allowed into the country, permit U.S. pharmaceutical companies to more easily compete in the Asian market, and lifts regulations on labeling of mechanical exports.

The Trump administration anticipates more deals like these that will benefit the U.S. economy as more countries look to escape the tariff.

About Kyle Daly

Kyle Daly
Senior and the Sun's Sports Editor, Kyle Daly is active on campus as Captain of the Water Polo team and Sundevil Ambassador.

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