Not so long ago, President Donald Trump announced that the United States has imposed tariffs on imported steel and aluminum in the amount of 25% and 10% respectively. Many commentators recognize, this is as a hit on Chinese economy, but the truth is a bit different.
Yes, China is the largest steel producer in the world, but the US imports a small part of the demand for this metal from China. The largest Chinese steel export markets are South Korea, Vietnam and Philippines. The United States imports steel from Canada, Brazil and South Korea. The announced steel tariffs will not hit China directly, but may affect imports from Canada or South Korea.
In addition, President Donald Trump excluded from imposed duties country of Canada and Mexico for 30 days. Will the exemption last after this period? It is not known. The imposition of duties on steel and aluminum should be treated as a bargaining chip in negotiations over the NAFTA. The US is trying to exert more pressure on Canada and Mexico to negotiate better conditions when signing the NAFTA agreement.
On the other hand, the negative effects can be brought by import tariffs over $60 billions worth of chinese information technology, telecoms and consumer products as part of a U.S. investigation into China’s intellectual property practices. At this moment we do not know what’s happening, and the white house refuses to comment on this topic. Any decision made to impose tariffs in these areas is recognize as response to China’s trade surplus with the United States, amounting to 375 billion US dollars.
Any trade war of the two largest economies in the world would be canastrophic for the world.