Just the Facts
Five Facts on Tariffs
By No Labels
June 7, 2018 | Blog
On May 31, President Trump announced his intention to impose tariffs on steel and aluminum imports from a variety of countries, including close allies—Canada, Mexico, and the European Union. The move has drawn ire from both sides of the aisle on Capitol Hill, as elected officials argue that the tariffs could put undue strain on American manufacturers that rely on steel and aluminum to build their products. However, the Trump administration has argued that the tariffs are a necessary measure designed to put pressure on trading partners and secure better long-term trade deals for the United States. Here are 5 facts on Trump’s tariffs and what they could mean for the world economy:
The Trump administration announced that Canada, Mexico, and the European Union will face 25% tariffs on steel and 10% tariffs on aluminum
The steep duties constitute a serious economic hit to these three countries. It is estimated that the tariffs—once implemented—will cost the Mexican steel and aluminum industry $2 billion per year, while also imposing an estimated additional $7.5 billion dollars on the E.U.’s steel and aluminum sector. However, Canada will likely take the biggest hit. While Canada’s additional cost is estimated to total only $3.2 billion, it affects a much higher percentage of the country’s economy. In 2016, 88% of Canadian steel exports went to the United States, while Germany, the largest steel exporter in the E.U., sent only 5% of its steel to the U.S.
In 2017, the U.S. steel-trade deficit amounted to 24.6 million metric tons
This past year, the United States exported 10 million metric tons of steel, while importing 34.6 million metric tons—making the United States the world’s top steel importer. America’s aluminum-trade deficit amounted to 4.7 million metric tons, over five times national aluminum production.
The tariffs target many American allies
Trump had originally exempted Canada and Mexico from metal tariffs imposed on numerous countries in March, but they now join the European Union on the list of targeted allies. Canada and Mexico are the first and third largest suppliers of steel and aluminum to the United States. In an attempt to avoid tariffs, South Korea, Brazil, and Argentina have complied with metal shipment restrictions, and China has offered to buy $70 billion in U.S. goods.
Allies have already announced plans for retaliatory tariffs—targeting steel and agricultural products
Canada, Mexico, and the E.U. have already announced plans to impose significant tariffs on the import of a variety of U.S. products. Canadian Prime Minister Justin Trudeau has announced plans to impose a 25% tariff on U.S. steel, while the E.U. intends to place duties on U.S. exports, such as steel, motorcycles, and agricultural products. Finally, Mexico has also announced tariffs ranging from 15% to 25% on imports of U.S. steel, as well as products like pork, cheese, apples, potatoes, and even bourbon.
George W. Bush was the last President to impose tariffs on steel, doing so in 2002
In an attempt to protect the U.S. steel industry from low-cost steel imports, President Bush imposed tariffs ranging from 8% to 30% on steel imports from numerous countries. While Bush exempted allies such as Canada and Mexico—China, Japan, South Korea, Ukraine and Russia felt the brunt of the increased duties. At the time of its passing, Bush’s tariffs enjoyed bipartisan support, as the Democratic leaders in both the House and the Senate applauded the president for his decision.