Tariffs: a bad deal for all

in #news7 years ago (edited)

Trump is looking to put tariffs on US imports of steel and aluminum.
This is very serious from an economic and financial point of view but it is even more important from a political standpoint
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Without going in too much detail, companies that sell Steel and/or Aluminum products to the USA might, if this executive order goes through, have to pay a 25% "tax" for steel and 10% for aluminum. Bear in mind the US imports 25% of its steel consumption so indeed a few companies are impacted by this, but actually it is going to be heavy for the Canadian steel industry. Automakers in the US as well may be somewhat seeing their profit margins get squeezed, but its estimated to be only a 0.5% hit on their P&Ls, not a big direct financial impact overall
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What is worrying though

is the political effect. The retaliation from Euope, China and Canada with counter-tariffs is for sure going to come, as actually already said by Monsieur givemeabeerJunker. Not only that, the WTO (World Tradr Organization) will likely support those counter measures. The effects of these are HUGE
Just think that, as the IMF (International Monetary Fund) reports, a supposedly wide increase of tariffs by 10% on many products/commodities, enacted by China, Europe, USA and Canada, would result in a decline in GDP, of every country concerned, of 3%!!!
Its a Lose-Lose strategy.

The protectionist narrative momentum is building and it is dangerous

As a reminder, this is not only about Trump, also, for sure, but recall when Obama put tariffs on tires in 2009? They got repealed 18 months afterwards because the US started feeling the effects of the trade regulation retaliation of other countries.
So hopefully, this may be justa bluff by Trump&team, a dangerous one, he always aim very high and aggresive anyhow. Though, should it realize, well, hopefully retaliations will come and Trump will repeal the executive order and realize the bad move he has made.

Just my thoughts,

Peace and prosperity, we need a united world, lets start working together.

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nice analysis ...bravo! protectionism is not a solution, never.

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A bad and expensive deal for all!

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