Metal is forged here
Donald Trump again entered the role of an agent of the Kremlin. He was probably armed with Putin’s cunning plan. The American president plans to destroy at the same time three US industries: automotive, construction and energy.
The American press is full of reports of attempts by the White House to influence the situation in the global metallurgical industry, despite the WTO rules, and to infringe upon China. China has already answered: increased steel production.
D. Trump's plans to make American steel “great again” could lead to new global trade wars. Trump's intention to use trade loopholes will harm US allies more than China, analyst Z. Alim said. He writes about this on the website "Vox".
President Trump set out to strike China’s steel industry, using the trade loophole in US law for that purpose. However, the American allies will sense this blow on themselves. Ultimately, they can respond with "tough measures" that will give rise to global trade wars.
There are only a few steps left before the final clarification of what Mr. Trump started. In general, everything is already clear: the White House is talking about the completion of an “investigation” into the fact that steel imports pose a threat to US national security. This was first talked about at the highest level at the end of April.
The Trump administration uses a little-known provision (paragraph 232) of the 1962 Trade Expansion Act, arguing that if the United States does not have reliable access to materials needed for national security, Washington will have the right to introduce barrage trade barriers to stimulate domestic production of such materials. The paragraph is valid in the event of war. The White House suggests that this item can now be used for steel, a vital metal for defense technology.
Currently, the administration is considering two main options: 1) duties that will be levied on all steel entering the United States. In this case, imported steel will become prohibitively expensive; 2) quotas that allow importing a certain amount of steel every year to each supplier, and then - the same protective duties. The Trump administration believes that both options are good for American steelworkers and a serious blow to China.
And indeed, the United States is the largest importer of steel in the world, and China is the world's largest manufacturer. Barriers to steel imports should give American steelmakers jobs and lead to a decline in steel production in China.
On the other hand, such actions violate the rules of global trade. And the prospect of “punitive” duties is not at all disturbed by China alone - the United States is thinking of a future decision in many states, including America’s close allies. The most interesting thing is that China has nothing to do with it: it doesn’t even fall into the top ten steel suppliers of the United States today.
The fact is that Washington has repeatedly punished Beijing for various violations of trade rules. As a result, the import of Chinese steel was limited - it turned from a river into a thin stream. The United States is now receiving huge amounts of steel from countries considered to be close allies and trading partners: these are Canada, South Korea and Mexico. And they will suffer from new quotas and duties, if they are introduced.
Recently, defense officials from Germany and the Netherlands appealed to the Trump administration, in particular to Secretary of Defense Mattis, about possible fees. Canadian officials also warned the White House about the undesirability of such a defense "maneuver." An interesting position was taken by representatives of the European Union: they consider as a response protective duties against American agriculture. Thus, Trump can incur the wrath of half the world.
Edward Alden, a senior fellow at the Council on Foreign Relations, told the publication that when the relevant “investigations” were being conducted, the government was already confident in its future decision. And this is not only national security - the latter is only a legal argument. In fact, Trump is trying to boost the domestic steel industry. But this means that the problem for Trump is already the production of steel American allies!
However, technically, the White House can make exceptions for its allies. For example, to establish that Canada and Mexico, the US NAFTA trading partners, are exempt from quotas or duties. However, this kind of situation, as well as complex quota systems, will be developed for a long time, and the Trump administration loves “high-speed traffic”. In addition, other US allies will suffer anyway.
Chad Bone, a senior researcher at Peterson's International Economics, a nonprofit organization, said research on such issues has been going on for many months, or even a year. They include public hearings with all interested parties, including players in the domestic industry and representatives of exporting countries. Now there is a rush: the White House is preparing to announce the decision "in the coming days", and the investigation of the current situation in the steel market was launched in late April, that is, quite a bit of time passed. In addition, the discussions took place almost entirely behind closed doors. Haste and secrecy will only increase the likelihood of Trump’s failure and unnecessary financial losses in a trade war.
The World Trade Organization (WTO) technically allows countries to exclude certain free trade regulations due to national security. But this exception is rarely used. And, which is extremely important, the whole world community would understand that Trump's idea has no basis in the form of real security considerations. Everyone would understand that the White House administration is simply using a loophole, wanting to advance the economic interests of the United States.
In this case, an indication of national security will look like an “unfair maneuver” for the entire planet. Looking at the behavior of America, other countries can take similar actions to justify their own protectionism. The “sudden” exception made about “national security” may later become a reason for evading tariff rules and ultimately become a source of all sorts of conflicts and court proceedings in the WTO.
According to Alden, some European officials are already talking about possible retaliatory tariffs against the United States in other sectors of the economy - for example, with references to “food security.” As a result, exports of American agricultural products can be seriously affected. Americans will start losing jobs in the industry.
There is, however, one moment. Todd Tucker, a trade expert at the Roosevelt Institute, argues that Trump’s alleged move could still be productive. The reason for the decision may be something more: for example, negotiations with the world community on the topic of countering the tricks of China, which he admits in the production of steel.
Here's how it could work: Trump threatens to impose duties on all imports of steel, but makes the allies understand that these are temporary measures that can be lifted if other countries in the world agree to join the United States to discuss China’s behavior. Then they could make a collective decision to counter the Chinese domination with the help of agreed tariffs. This would encourage China to return steel prices.
There are precedents of such a market collusion, when the USA applied duties to encourage countries to take collective action.
In 1971, Mr. Nixon used “aggressive duties” on incoming goods to force other states to sit down at the negotiating table with the United States about the dollar rate. Later, Reagan used the same “threat of duties” to develop a common position among countries for cooperation on monetary issues (1985).
But Trump has no authority for Reagan. And to negotiate with the international community, authority is required. Trump’s constant ambiguity and unpredictability, the obscure "signals" that he sends to the world, and finally, his "hostile" attitude toward fulfilling US commitments across everything from trade deals to military alliances, "destroyed trust in the ability of the United States to actually fulfill its promises," analyst. This behavior will repel the US allies from the negotiations.
Mr. Tucker also doubts that duties could help create jobs in the United States. The country is already approaching full employment, but the increased profitability in steel production is likely to lead only to an outflow of personnel from other industries.
Bone of the Peterson Institute is also skeptical of the supposed benefits of steel industry jobs. First, recreating jobs in an industry that uses sophisticated technology is a difficult process and involves not using human power, but robots and technologies that make production cheaper. In the long term, this is what affects the number of jobs in the US steel industry, the expert believes. Another problem is that many industries (automotive, construction, energy) rely on cheap steel. Difficulties will arise in these industries: due to duties and the rise in the cost of steel, their profits will fall. And what will happen to jobs and wages?
If Trump actually introduces duties or quotas, he will probably end up hurting ... the United States.
The most interesting thing is that on the threshold of Trump’s decision, the Chinese have steeply increased steel output.
July 17 «Bloomberg» published the latest data, according to which steel production in June amounted to 73,23 million tons, which is 5,7% more than a year earlier. In the first half of the year, compared with the same period last year, the growth in steel output was 4,6% (419,75 million tons were produced). China has consolidated its status as the largest steel producer in the world.
The same is true for aluminum (an increase of 8,8% for the first half of the year).
This information went around all the world agencies. Reuters writes the same thing, adding in the headline that China has increased steel output precisely because of the alleged US duties.
The output of Chinese steel and aluminum increased in a “record short time,” according to the material. And this is due to the consideration in the White House of the idea of introducing duties. Chinese manufacturers seek to release and sell as much as possible, fearing the introduction of duties in order to resist the dominance in the market of low-grade metal supplied by China.
Tensions in China’s relations with the United States increased after the White House accused China of flooding international markets with cheap aluminum and steel, the authors of the article remind.
Mr. Trump's ability, we add, to make unexpected decisions and surprise the world with its unpredictability, this time can play a bad joke with the owner of the Oval Office. Preferring to solve issues in a narrow circle and intending to advance the interests of the United States to the detriment of not only the world, but even the United States itself, Trump has long been bent over. The first bell was his attempt to force some Europeans (especially Germans and Austrians) to refuse to cooperate with Gazprom and buy American liquefied gas. Now Trump wants to convince the whole world that this world itself should buy more expensive steel. "Fords", by the way, also become more expensive. But Trump doesn't look that far.
The American press is full of reports of attempts by the White House to influence the situation in the global metallurgical industry, despite the WTO rules, and to infringe upon China. China has already answered: increased steel production.
D. Trump's plans to make American steel “great again” could lead to new global trade wars. Trump's intention to use trade loopholes will harm US allies more than China, analyst Z. Alim said. He writes about this on the website "Vox".
President Trump set out to strike China’s steel industry, using the trade loophole in US law for that purpose. However, the American allies will sense this blow on themselves. Ultimately, they can respond with "tough measures" that will give rise to global trade wars.
There are only a few steps left before the final clarification of what Mr. Trump started. In general, everything is already clear: the White House is talking about the completion of an “investigation” into the fact that steel imports pose a threat to US national security. This was first talked about at the highest level at the end of April.
The Trump administration uses a little-known provision (paragraph 232) of the 1962 Trade Expansion Act, arguing that if the United States does not have reliable access to materials needed for national security, Washington will have the right to introduce barrage trade barriers to stimulate domestic production of such materials. The paragraph is valid in the event of war. The White House suggests that this item can now be used for steel, a vital metal for defense technology.
Currently, the administration is considering two main options: 1) duties that will be levied on all steel entering the United States. In this case, imported steel will become prohibitively expensive; 2) quotas that allow importing a certain amount of steel every year to each supplier, and then - the same protective duties. The Trump administration believes that both options are good for American steelworkers and a serious blow to China.
And indeed, the United States is the largest importer of steel in the world, and China is the world's largest manufacturer. Barriers to steel imports should give American steelmakers jobs and lead to a decline in steel production in China.
On the other hand, such actions violate the rules of global trade. And the prospect of “punitive” duties is not at all disturbed by China alone - the United States is thinking of a future decision in many states, including America’s close allies. The most interesting thing is that China has nothing to do with it: it doesn’t even fall into the top ten steel suppliers of the United States today.
The fact is that Washington has repeatedly punished Beijing for various violations of trade rules. As a result, the import of Chinese steel was limited - it turned from a river into a thin stream. The United States is now receiving huge amounts of steel from countries considered to be close allies and trading partners: these are Canada, South Korea and Mexico. And they will suffer from new quotas and duties, if they are introduced.
Recently, defense officials from Germany and the Netherlands appealed to the Trump administration, in particular to Secretary of Defense Mattis, about possible fees. Canadian officials also warned the White House about the undesirability of such a defense "maneuver." An interesting position was taken by representatives of the European Union: they consider as a response protective duties against American agriculture. Thus, Trump can incur the wrath of half the world.
Edward Alden, a senior fellow at the Council on Foreign Relations, told the publication that when the relevant “investigations” were being conducted, the government was already confident in its future decision. And this is not only national security - the latter is only a legal argument. In fact, Trump is trying to boost the domestic steel industry. But this means that the problem for Trump is already the production of steel American allies!
However, technically, the White House can make exceptions for its allies. For example, to establish that Canada and Mexico, the US NAFTA trading partners, are exempt from quotas or duties. However, this kind of situation, as well as complex quota systems, will be developed for a long time, and the Trump administration loves “high-speed traffic”. In addition, other US allies will suffer anyway.
Chad Bone, a senior researcher at Peterson's International Economics, a nonprofit organization, said research on such issues has been going on for many months, or even a year. They include public hearings with all interested parties, including players in the domestic industry and representatives of exporting countries. Now there is a rush: the White House is preparing to announce the decision "in the coming days", and the investigation of the current situation in the steel market was launched in late April, that is, quite a bit of time passed. In addition, the discussions took place almost entirely behind closed doors. Haste and secrecy will only increase the likelihood of Trump’s failure and unnecessary financial losses in a trade war.
The World Trade Organization (WTO) technically allows countries to exclude certain free trade regulations due to national security. But this exception is rarely used. And, which is extremely important, the whole world community would understand that Trump's idea has no basis in the form of real security considerations. Everyone would understand that the White House administration is simply using a loophole, wanting to advance the economic interests of the United States.
In this case, an indication of national security will look like an “unfair maneuver” for the entire planet. Looking at the behavior of America, other countries can take similar actions to justify their own protectionism. The “sudden” exception made about “national security” may later become a reason for evading tariff rules and ultimately become a source of all sorts of conflicts and court proceedings in the WTO.
According to Alden, some European officials are already talking about possible retaliatory tariffs against the United States in other sectors of the economy - for example, with references to “food security.” As a result, exports of American agricultural products can be seriously affected. Americans will start losing jobs in the industry.
There is, however, one moment. Todd Tucker, a trade expert at the Roosevelt Institute, argues that Trump’s alleged move could still be productive. The reason for the decision may be something more: for example, negotiations with the world community on the topic of countering the tricks of China, which he admits in the production of steel.
Here's how it could work: Trump threatens to impose duties on all imports of steel, but makes the allies understand that these are temporary measures that can be lifted if other countries in the world agree to join the United States to discuss China’s behavior. Then they could make a collective decision to counter the Chinese domination with the help of agreed tariffs. This would encourage China to return steel prices.
There are precedents of such a market collusion, when the USA applied duties to encourage countries to take collective action.
In 1971, Mr. Nixon used “aggressive duties” on incoming goods to force other states to sit down at the negotiating table with the United States about the dollar rate. Later, Reagan used the same “threat of duties” to develop a common position among countries for cooperation on monetary issues (1985).
But Trump has no authority for Reagan. And to negotiate with the international community, authority is required. Trump’s constant ambiguity and unpredictability, the obscure "signals" that he sends to the world, and finally, his "hostile" attitude toward fulfilling US commitments across everything from trade deals to military alliances, "destroyed trust in the ability of the United States to actually fulfill its promises," analyst. This behavior will repel the US allies from the negotiations.
Mr. Tucker also doubts that duties could help create jobs in the United States. The country is already approaching full employment, but the increased profitability in steel production is likely to lead only to an outflow of personnel from other industries.
Bone of the Peterson Institute is also skeptical of the supposed benefits of steel industry jobs. First, recreating jobs in an industry that uses sophisticated technology is a difficult process and involves not using human power, but robots and technologies that make production cheaper. In the long term, this is what affects the number of jobs in the US steel industry, the expert believes. Another problem is that many industries (automotive, construction, energy) rely on cheap steel. Difficulties will arise in these industries: due to duties and the rise in the cost of steel, their profits will fall. And what will happen to jobs and wages?
If Trump actually introduces duties or quotas, he will probably end up hurting ... the United States.
The most interesting thing is that on the threshold of Trump’s decision, the Chinese have steeply increased steel output.
July 17 «Bloomberg» published the latest data, according to which steel production in June amounted to 73,23 million tons, which is 5,7% more than a year earlier. In the first half of the year, compared with the same period last year, the growth in steel output was 4,6% (419,75 million tons were produced). China has consolidated its status as the largest steel producer in the world.
The same is true for aluminum (an increase of 8,8% for the first half of the year).
This information went around all the world agencies. Reuters writes the same thing, adding in the headline that China has increased steel output precisely because of the alleged US duties.
The output of Chinese steel and aluminum increased in a “record short time,” according to the material. And this is due to the consideration in the White House of the idea of introducing duties. Chinese manufacturers seek to release and sell as much as possible, fearing the introduction of duties in order to resist the dominance in the market of low-grade metal supplied by China.
Tensions in China’s relations with the United States increased after the White House accused China of flooding international markets with cheap aluminum and steel, the authors of the article remind.
Mr. Trump's ability, we add, to make unexpected decisions and surprise the world with its unpredictability, this time can play a bad joke with the owner of the Oval Office. Preferring to solve issues in a narrow circle and intending to advance the interests of the United States to the detriment of not only the world, but even the United States itself, Trump has long been bent over. The first bell was his attempt to force some Europeans (especially Germans and Austrians) to refuse to cooperate with Gazprom and buy American liquefied gas. Now Trump wants to convince the whole world that this world itself should buy more expensive steel. "Fords", by the way, also become more expensive. But Trump doesn't look that far.
Observed and commented on Oleg Chuvakin
- especially for topwar.ru
- especially for topwar.ru
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