China fires back as U.S. places tariffs on incoming products
By Daniela Wainfor ’18
In early March 2018, Trump went through with his decision to place tariffs on imported aluminum and steel. The White House argued that these new tariffs would increase jobs in America, and punish China for decades of unfair trade habits, but economists and business leaders from all sides of the political spectrum are arguing that these tariffs might do just the opposite. Putting tariffs on steel and aluminum could potentially hurt both the U.S. and other economies. And China is firing back, declaring they will do “anything” to protect their economy.
While on the campaign trail, Trump promised to place tariffs on some internationally imported products in an attempt to encourage consumers to purchase locally and increase the economic power of the U.S. Against the recommendation of Trump’s pro-trade advisers, he chose to go ahead and place a tariff of 25 percent on steel and 10 percent on aluminum coming in from other countries.
Because China is a mass-producing country, it is possible to import their products into the U.S. at a very low cost, which encourages American consumers to buy their products.
Imposing tariffs on these metal products coming in from all countries could hurt the U.S. in the long run, seeing as Canada supplies a hefty amount of these metals to many American companies and even the military. That’s why Trump left a few countries exempt from these taxes including Canada, Mexico, the European Union, Australia, Argentina, Brazil and South Korea.
The ripple effect is something many business and economic experts are well aware of. It happens when one company’s economy crashes and they can’t easily or cheaply export products, which in turn could cause other economies that depend on that one to crash as well. And that’s something many business leaders and economists are speculating might happen with these new tariffs imposed.
Melissa Blaustein, the founder and CEO of the advocacy group Allied for Startups, which helps small businesses across borders represent their interest to local governments, believes the ripple effect could take place here and even hurt small businesses.
“We really believe there is a possible negative chain reaction,” Blaustein said. “Any time you introduce a new barrier to entry… it makes it more difficult for startups to create the products and services they want in the long run.”
Imposing these tariffs is among the many aggressive trade policy changes including threatening to break up the multi million dollar North American Free Trade Agreement.
The European Union has already threatened to slap tariffs on products associated with American culture such as Harley-Davidsons, Kentucky bourbon and blue jeans.
The U.S. has much to lose in a trade war especially with the northern ally, Canada, which happens to be both the largest buyer of American steel and the largest supplier of steel to the U.S.
Chinese government officials have spoke out stating that Trump’s strategy could end up hurting the U.S. more than other countries.
“I feel Trump’s decision is stupid. It will only make the U.S. steel industry, which is already 10 years behind China, more left behind,” said Li Xinchuang, vice chairman of the China Iron and Steel Association.