All The News You Need To Know 3/8/18
President Trump is expected to sign a formal order imposing steep tariffs on imported steel and aluminum by the end of this week. The order carries a 25 percent tariff on imported steel and a 10 percent levy on imported aluminum. The protectionist order intends to bolster the domestic steel and aluminum industries which have been hit hard under pressure from imports. Over the last two decades employment in the domestic steel industry has shrunk by 35 percent, while the aluminum industry shed nearly 60 percent of its jobs between 2013 and 2016. Critics of the move believe that the tariffs could increase costs for US businesses and consumers while alienating potential trading partners.
The European Union is threatening retalitory tariffs should the US proceed with steel reform and their targets could be political. EU leaders look to hit strong American brands with increased tariffs on motorcycles, whiskey, and blue jeans. Such a move would directly affect the home states of Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan, key players in Trump's administration. European Commission President Jean-Claude Juncker said on German television that if Trump goes ahead with taxes on steel and aluminum, the EU can "also do stupid" and impose tariffs of its own.
Farmers fear China may retaliate by slowing imports of US soybeans or by erecting trade barriers to them. Annually, China buys over over 100 million tons of soybeans from the global market with roughly a third of that coming from the US. The US soybean market has already seen sales to China decline due to competition from Brazil. Many Chinese farmers prefer the cheaper cost and higher protein content of Brazilian soybeans over their American counterpart. The American Soybean Association, a trade group, said Chinese officials in Washington, D.C., told its leaders that retaliation "would be devastating to U.S. soy growers."
With a trade war looming the White House may allow exemptions for US allies. White House Press Secretary Sarah Huckabee Sanders confirmed President Trump's plans. "There are potential carve-outs for Mexico and Canada based on national security and possibly other countries as well, based on that process," Sanders said. Canada is by far the largest single shipper of steel and aluminum to the United States. Mexico, South Korea and Japan, as well as North Atlantic Treaty Organization members such as Germany and Turkey, stand to be among the biggest losers if the tariffs take effect. Once the tariffs take effect there will be a 15-day window for when they need to be implemented. During that time is when other countries could plead their case for an exemption.
Steel tariffs are tied to NAFTA as Mexico and Canada could lose exemption if reform talks fail. Negotiators for the US, Mexico, and Canada finished off their 7 th round of NAFTA talks this week, however a number of sticking points still need to be resolved. More than 100 House Republicans, led by Ways and Means Committee Chairman Kevin Brady, urged Trump on Wednesday to reconsider broad tariffs, warning that they would cost American jobs, raise prices for consumers and hurt domestic manufacturing. Amid all of this, Gary Cohn, Trump's top financial and free trade adviser resigned on Tuesday.
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