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Enforces 25% tariffs on steel and aluminum imports
Despite warnings from China and Europe, US President Donald Trump stepped up his long-promised trade war on Monday by enforcing his pledge to impose 25% tariffs on imports of steel and aluminum.
On Sunday, while traveling to Louisiana for the Super Bowl, the Republican president announced the decision on Air Force One.
Trump’s Tariff Measures Impact on Global Stock Markets
Global stock markets surged prior to Trump issuing executive orders enforcing the measures, as traders who were feeling “tariff fatigue” seemed to dismiss Trump’s proposals.
“Today I’m simplifying our tariffs on steel and aluminum,” Trump declared as he was at the White House. “It’s 25 percent without exceptions or exemptions.”
Additionally, he said that he would consider enacting more tariffs on computer chips, medicines, and autos.
According to US trade data, the two countries that import the most steel into the US are Canada and Mexico, both of which Trump has already threatened with tariffs. South Korea and Brazil are other important suppliers of steel.
“President Trump has made it clear that steel production is an important part of an America First Golden Age,” Kevin Hassett, director of the National Economic Council, told CNBC.
Trump’s 2017-2021 Tariffs
In line with remarks made by Australian Prime Minister Anthony Albanese, the US leader stated that he was thinking about exempting Australia from the steel tariffs.
“We have one of the rare (trade) surpluses to Australia. They purchase a lot of airplanes, which is the cause. They require a lot of airplanes and are rather far,” he stated.
Additionally, Trump has pledged to unveil more extensive “reciprocal tariffs” on Tuesday or Wednesday that would equal the taxes other nations impose on US goods.
During his administration from 2017 to 2021, he implemented broad tariffs to safeguard American sectors that he felt were unfairly competing with those of Asia and Europe.
Losers
A “massive” disruption was forewarned by Canadian steelmakers, and the European Commission declared that it will “react to protect the interests of European businesses, workers, and consumers from unjustified measures.”
In an interview that was broadcast on Sunday, French President Emmanuel Macron promised to confront Trump about his broader tariff threats against the European Union, but he also stated that the United States should concentrate its efforts on China.
According to Robert Habeck, the German Economy Minister, a tariff dispute “only has losers.”
According to consulting firm Roland Berger, the United States accounts for around 25% of European steel exports.
The steel industry association in Britain referred to the proposed tariffs as a “devastating blow.”
Soon after taking office, Trump imposed tariffs on Canada, Mexico, and China, three important trading partners, demonstrating his preference for using the US economy as a weapon.
After both Canada and Mexico pledged to increase efforts to stop the supply of the opioid fentanyl and the entry of unauthorized migrants into the United States, he temporarily suspended 25 percent levies against them for a month.
Tariff fatigue
However, Trump proceeded to impose tariffs on China, the second-largest economy in the world, imposing an extra 10% tax on goods entering the US.
On Monday, China will impose retaliatory tariffs on US coal and liquefied natural gas.
Speaking on Monday, Guo Jiakun, the spokesperson for China’s foreign ministry, stated that “there is no winner in a trade war and tariff war.”
During Japanese Prime Minister Shigeru Ishiba’s visit last week, Trump also brought up steel.
Instead of attempting to acquire the struggling company, the American leader claimed to have negotiated an arrangement for Japan’s Nippon Steel to make a significant investment in US Steel.
Although the majority of experts disagree, Trump, who has pledged a “new golden age” for the US, maintains that any tariffs will be paid for by foreign exporters rather than by US consumers.
However, he did admit last month that the taxes may cause immediate economic “pain” for Americans.
Despite the tariff threat, Wall Street’s major indexes ended Monday higher. Shanghai and Hong Kong stocks also increased, as London and Frankfurt reached new records.
Research director Kathleen Brooks of trading organization XTB stated, “The fact that global equity indices are higher at the beginning of the week could be a sign of tariff fatigue.”
On Monday, the dollar also strengthened versus the Canadian dollar, the Mexican peso, and the South Korean won.
