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The latest maneuvers by US President Donald Trump in the trade dispute is a shot in the foot. In order to guarantee faster trading results, he can better withdraw his last withdrawals.
Earlier this month, Canadian retaliation came into effect in response to Trump's import duties on steel and aluminum. Earlier, the EU, China and Mexico did the same. This means that previously obtained results evaporate for the United States.
Until the G7 summit, Trump was in good shape. By threatening high import tariffs on steel and aluminum, he has managed to force the big steel exporters from South Korea, Brazil and the United States. Argentina to "voluntarily" limit their exports to the United States. Japan and Russia have accepted the increase in border tax and have taken no countermeasure.
These results improve the competitive position of American steel and aluminum producers, so that "after a while, there will be work in this industry where we can find so many supporters of Trumps.
Unfair disadvantage
US companies that buy steel and aluminum. They now rely on domestic steel and aluminum that are more expensive, or on the import that has become more expensive. This disadvantage weighs less heavily for Trump because it is spread over more companies and sectors and therefore less difficult for each company. In addition to improving the competitive position of US steel and aluminum companies, the threat of levies has had a consequence: Canada and Mexico were more willing to accept the United States . to come to the renegotiation of the North American Free Trade Agreement Nafta.
Profit
The biggest benefit seemed to be to reserve Trump over China. This country has pledged to import 70 billion US dollars from the United States, to reduce import duties on cars and to relax restrictions on foreign investment in financial services and the economy. automobile industry.
hardly need to give something back, not enough. At the end of May, he decided to impose steel taxes in Canada, Mexico and the EU. To top it off, he told us two weeks ago that 50 billion imports from China would be taxed at 25%. It has also threatened to hit another $ 200 billion of imports from China with a 10% levy if China dares to execute the announced countermeasures.
Post-damage for the United States
Trump struggles with these last steps. First of all, with a 25% levy on a package of 50 billion goods, Chinese exports to the United States can never decrease by 70 billion. An additional 10 percent levy on a $ 200 billion package on other Chinese products also does not work. The US trade balance would be more advantageous if Trump were satisfied with the Chinese commitment of 70 billion imports, especially as US exports to China would drop as soon as Chinese countermeasures would come in. force.
The US export industry increases because Canada, Mexico and the EU also take countermeasures, and it becomes clear that Trump is in the throes of a trade war
Losers [19659006] The current escalation of trade conflict only leads to the losers, The United States will suffer the most damage. After all, US exporters will have to pay higher taxes at many limits. The countries with which the United States started a trade war are only affected in one place: the US border.
But it's not too late. Trump can simply cancel its additional import rights, which will also remove the countermeasures. If he compares the costs and benefits to each other, he can only conclude that the United States is better off when he comes back.
Raoul Leering is Head of International Trade Research at ING
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