Trump launched a trade war. Who will lose in it?
The President of the United States, Donald Trump, pursuing a protectionist policy towards American manufacturers, actually embarked on the path of a trade war against most countries in the world exporting their products to the United States. Even during the presidential campaign, Donald Trump said that the main economic rival of the United States in the current situation is China.
The cheapness of Chinese products leads to the fact that American manufacturers neither on the external nor the domestic market can compete with it adequately. It is for this purpose that Trump announced the introduction of 25% duty on steel imports and 10% duty on imports of aluminum to the United States. But the introduction of duties struck not only in China, but also in a whole range of other states, including not only Russia, with which the US has tense relations, but also the countries of the European Union, and Japan, and Ukraine’s “favorite satellite”. Moreover, China is only in 11-th place among the countries exporting steel to the United States.
The decision to impose duties was taken by Donald Trump not spontaneously. The US President was also pushed to this by specialists from the US Department of Commerce, who a year ago, in April 2017, concluded that the import of steel and aluminum from other states to the United States is a serious threat to the national security of the American state.
The fact is that in recent years, steel imports four times exceeded export volumes. In the structure of consumption of primary aluminum, the share of imports reached 90%. Accordingly, the very existence of the American metallurgical industry, as well as the normal functioning of the US military-industrial complex, was threatened. After all, aluminum is used in the aircraft industry, shipbuilding, steel - in the automotive industry. In a critical situation, the United States would be dependent on the supply of aluminum and steel from other states, which would undermine the defense capability of the American state. In addition, American companies suffer from excessive dominance of foreign producers, and jobs in the American steel industry are shrinking, which leads to an increase in social tensions. In this regard, Donald Trump and decided to impose duties.
The legal basis for such a decision was the article 232 of the Trade Expansion Act, adopted in 1962 year. This legal act gives the United States the right to take unilateral measures to restrict imports of products from other states, if these measures are aimed at ensuring American interests in the field of national security. In deciding to impose duties, Donald Trump said that the US steel industry was "devastated" as a result of the over-aggressive expansion of other countries into the US market.
The world was in a difficult situation. After all, the introduction of duties on steel and aluminum inevitably entails numerous losses for steel companies in countries that supply steel and aluminum products to the United States. Trump's move was very successful, because he put so many countries into a state of choice - either negotiate with Washington and make concessions, or retaliate, or accept the introduction of duties.
In the most difficult situation were the closest neighbors of the United States - Canada and Mexico, which also export their products to the United States. However, Donald Trump almost immediately stressed that he was making both neighboring countries on the list of exceptions, but only if they agree on new terms for extending the agreement on the North American Free Trade Zone (NAFTA). Thus, the introduction of duties was used by the United States in order to put pressure on Canada and Mexico and force them to make decisions that are beneficial to Washington.
Australia was included in the “white list” of countries where duties were not spread, which also hurried to make concessions to the requirements of the United States, just not to incur losses and not to lose the American market.
In Brussels, Trump's protectionist policies raised many complaints. Europe was really afraid that European companies would have to incur serious losses as a result of the introduction of duties on steel and aluminum. As in the case of Canada and Mexico, with respect to the European Union, Trump also took the position of a blackmailer. For the US, it is beneficial for the European Union to abolish duties on US imports. This requirement was put forward as one of the main conditions for the abolition of duties on steel and aluminum imported from Europe.
European Trade Commissioner Cecilia Malmstrom emphasized that the introduction of duties would have a very bad effect on US-European relations, and European Commission President Jean-Claude Juncker promised to take tough retaliation against the United States. But Donald Trump was “in his pocket” another great tool of influence - he said that if the European Union imposes restrictions on the importation of American goods, the United States, in turn, will impose high duties on the import of European cars. For France and Germany, which are major car manufacturers in Europe, this is fraught with serious losses. So, the German car concern Volkswagen could lose 22 billion euros in the case of the introduction of duties, since it is the United States that is one of the main buyers of German cars.
The Republic of Korea, an important political and economic ally of the United States in the Asia-Pacific region, was faced with a dismal prospect of losses from US duties. In the second half of the twentieth century, in an effort to provide support to South Korea as an ally in the Cold War, the United States nurtured a competitor to itself - a real economic leap occurred in the Republic of Korea, and the country achieved particular success in the field of high technologies. Therefore, now RK is not only an ally, but also a competitor of the United States. Therefore, Trump also used his protectionist measures to pressure Seoul.
26 March The United States and South Korea agreed to modernize a bilateral agreement on a free trade zone (KORUS) and to regulate steel imports to the United States. In fact, this modernization was the result of Trump's blackmailing measures. South Korea was forced to agree, firstly, on the reduction of the volume of steel supplied to the US by 30% compared with the volume of supplies over the past three years. Secondly, South Korea agreed with Washington's increase in tariffs for the supply of Korean pickups by 25% - for a term of up to 2041 of the year.
In exchange for concessions from South Korea, Washington agreed to exclude the country from the list of countries in respect of which the duties on importing steel and aluminum into the United States will apply. Since the United States is the second most important economic cooperation partner in South Korea, the country had no choice but to seek a common language with Trump and make concessions. So with respect to Seoul, Washington can celebrate a victory - he managed to “push through” the terms of further trade between the two countries that were favorable to him.
The US satellite in Eastern Europe - Lithuania, Latvia, Estonia, Ukraine - was in a difficult situation. 20 March The Ministry of Economic Development and Trade of Ukraine sent a request to the United States to remove the country from the list of countries in respect of which 25% duties on steel imports are being introduced. It is clear that Kiev was deeply concerned about Trump's decision - Ukraine imports about 1,5 million tons of steel to the USA. But soon the Ukrainian authorities were able to feel relief - Trump showed mercy to the Eastern European satellite and has not yet begun to impose duties on Ukraine, including this country in the “white list”.
The United States also refused to impose duties on EU countries. Apparently, Trump and his administration compared all the costs that the American economy could incur as a result of the start of a trade war with the European Union, and decided to abandon plans to levy European imports. In addition, almost all US allies in NATO are members of the European Union, and in the current situation they did not want to aggravate relations with military-political partners in Washington.
Thus, the edge of American protectionist policies directed against China. Donald Trump accused China not only of overly aggressive trade policy and expansion into the American market, but also of stealing advanced technologies and blackmailing American companies, which, in order to receive Chinese investments, had to tell China the secrets of their technological innovations. These are very serious accusations.
At first, Beijing tried to warn the United States against the start of a trade war, emphasizing that not only the Chinese, but also the American economy would suffer as a result of the introduction of duties. However, faced with trump’s stubbornness, the PRC leadership was forced to move to retaliation. China has introduced duties and fees on some articles of American imports. At the same time, officially, China still seeks to demonstrate a complete peacefulness towards the United States and stresses that in the interests of peace, all global trading partners should cooperate freely.
The main task of Trump's policy in the trade war with China is to shield the American market from high-tech Chinese goods, which are sold much cheaper and are a serious competitor to American products. Trump accuses Chinese investors of acquiring stakes in American high-tech companies to learn all the technological secrets that are then used to manufacture similar Chinese products that are shipped to world markets at lower prices. The use of Western technology in combination with cheap Chinese labor over the past decade has given China tremendous advantages, bringing its economy to the positions it now occupies. Therefore, in the United States, a trade war is perceived, perhaps not as perfect, but as one of the few possible moves against the PRC.
But for us the question of how Trump’s new tariff policy will affect Russia is more important. According to most experts, although, of course, Russian companies will incur certain costs, they will not be as significant as those from other countries. The Russian economy, firstly, is self-sufficient to a certain extent, and secondly, the USA is not among the priority importers of Russian steel and aluminum. So, in 2017, Russia supplied 4,1 million tonnes of steel products to the USA. Steel accounts for less than 10% of total exports from Russia to the USA. As for aluminum, for the company UC Rusal, the Trump duties do not pose a threat at all - only 2% of exports are sent to the USA, therefore the company is easily reoriented to other markets. For her, it will even be useful, since new markets may be more profitable and promising than the US.
The deterioration of relations with the United States after the crisis in Ukraine led to the fact that the positions of Russian companies in the domestic market and in other markets only strengthened. As the sanctions associated with the events in Ukraine have positively influenced the development of domestic industry, so the tariffs introduced by Trump will only contribute to the further development of other markets by the Russian manufacturer, primarily the markets of developing countries in Asia, Africa and Latin America. It turns out that the measures taken by Trump to limit the foreign presence in the US market will benefit the Russian economy. But the problems may arise from the Americans themselves, because due to the introduction of duties, the prices of imported products will rise, and not all types of products can be promptly replaced by American counterparts.
The trade war unleashed by Donald Trump, as a result, seems to be more of an anti-Chinese operation, which will have a negative impact on those countries that have always preferred to cooperate with the United States. It is for this reason that Trump had to create a “white list” soon after the declaration of duties, including not only Mexico, Canada and Australia, but also Argentina, the European Union countries, South Korea, Ukraine and a number of other states. Therefore, it’s hardly possible to say that Trump “declared a trade war against the whole of humanity” - Washington realized that such a scenario would lead to very negative consequences for the States themselves.
The cheapness of Chinese products leads to the fact that American manufacturers neither on the external nor the domestic market can compete with it adequately. It is for this purpose that Trump announced the introduction of 25% duty on steel imports and 10% duty on imports of aluminum to the United States. But the introduction of duties struck not only in China, but also in a whole range of other states, including not only Russia, with which the US has tense relations, but also the countries of the European Union, and Japan, and Ukraine’s “favorite satellite”. Moreover, China is only in 11-th place among the countries exporting steel to the United States.
The decision to impose duties was taken by Donald Trump not spontaneously. The US President was also pushed to this by specialists from the US Department of Commerce, who a year ago, in April 2017, concluded that the import of steel and aluminum from other states to the United States is a serious threat to the national security of the American state.
The fact is that in recent years, steel imports four times exceeded export volumes. In the structure of consumption of primary aluminum, the share of imports reached 90%. Accordingly, the very existence of the American metallurgical industry, as well as the normal functioning of the US military-industrial complex, was threatened. After all, aluminum is used in the aircraft industry, shipbuilding, steel - in the automotive industry. In a critical situation, the United States would be dependent on the supply of aluminum and steel from other states, which would undermine the defense capability of the American state. In addition, American companies suffer from excessive dominance of foreign producers, and jobs in the American steel industry are shrinking, which leads to an increase in social tensions. In this regard, Donald Trump and decided to impose duties.
The legal basis for such a decision was the article 232 of the Trade Expansion Act, adopted in 1962 year. This legal act gives the United States the right to take unilateral measures to restrict imports of products from other states, if these measures are aimed at ensuring American interests in the field of national security. In deciding to impose duties, Donald Trump said that the US steel industry was "devastated" as a result of the over-aggressive expansion of other countries into the US market.
The world was in a difficult situation. After all, the introduction of duties on steel and aluminum inevitably entails numerous losses for steel companies in countries that supply steel and aluminum products to the United States. Trump's move was very successful, because he put so many countries into a state of choice - either negotiate with Washington and make concessions, or retaliate, or accept the introduction of duties.
In the most difficult situation were the closest neighbors of the United States - Canada and Mexico, which also export their products to the United States. However, Donald Trump almost immediately stressed that he was making both neighboring countries on the list of exceptions, but only if they agree on new terms for extending the agreement on the North American Free Trade Zone (NAFTA). Thus, the introduction of duties was used by the United States in order to put pressure on Canada and Mexico and force them to make decisions that are beneficial to Washington.
Australia was included in the “white list” of countries where duties were not spread, which also hurried to make concessions to the requirements of the United States, just not to incur losses and not to lose the American market.
In Brussels, Trump's protectionist policies raised many complaints. Europe was really afraid that European companies would have to incur serious losses as a result of the introduction of duties on steel and aluminum. As in the case of Canada and Mexico, with respect to the European Union, Trump also took the position of a blackmailer. For the US, it is beneficial for the European Union to abolish duties on US imports. This requirement was put forward as one of the main conditions for the abolition of duties on steel and aluminum imported from Europe.
European Trade Commissioner Cecilia Malmstrom emphasized that the introduction of duties would have a very bad effect on US-European relations, and European Commission President Jean-Claude Juncker promised to take tough retaliation against the United States. But Donald Trump was “in his pocket” another great tool of influence - he said that if the European Union imposes restrictions on the importation of American goods, the United States, in turn, will impose high duties on the import of European cars. For France and Germany, which are major car manufacturers in Europe, this is fraught with serious losses. So, the German car concern Volkswagen could lose 22 billion euros in the case of the introduction of duties, since it is the United States that is one of the main buyers of German cars.
The Republic of Korea, an important political and economic ally of the United States in the Asia-Pacific region, was faced with a dismal prospect of losses from US duties. In the second half of the twentieth century, in an effort to provide support to South Korea as an ally in the Cold War, the United States nurtured a competitor to itself - a real economic leap occurred in the Republic of Korea, and the country achieved particular success in the field of high technologies. Therefore, now RK is not only an ally, but also a competitor of the United States. Therefore, Trump also used his protectionist measures to pressure Seoul.
26 March The United States and South Korea agreed to modernize a bilateral agreement on a free trade zone (KORUS) and to regulate steel imports to the United States. In fact, this modernization was the result of Trump's blackmailing measures. South Korea was forced to agree, firstly, on the reduction of the volume of steel supplied to the US by 30% compared with the volume of supplies over the past three years. Secondly, South Korea agreed with Washington's increase in tariffs for the supply of Korean pickups by 25% - for a term of up to 2041 of the year.
In exchange for concessions from South Korea, Washington agreed to exclude the country from the list of countries in respect of which the duties on importing steel and aluminum into the United States will apply. Since the United States is the second most important economic cooperation partner in South Korea, the country had no choice but to seek a common language with Trump and make concessions. So with respect to Seoul, Washington can celebrate a victory - he managed to “push through” the terms of further trade between the two countries that were favorable to him.
The US satellite in Eastern Europe - Lithuania, Latvia, Estonia, Ukraine - was in a difficult situation. 20 March The Ministry of Economic Development and Trade of Ukraine sent a request to the United States to remove the country from the list of countries in respect of which 25% duties on steel imports are being introduced. It is clear that Kiev was deeply concerned about Trump's decision - Ukraine imports about 1,5 million tons of steel to the USA. But soon the Ukrainian authorities were able to feel relief - Trump showed mercy to the Eastern European satellite and has not yet begun to impose duties on Ukraine, including this country in the “white list”.
The United States also refused to impose duties on EU countries. Apparently, Trump and his administration compared all the costs that the American economy could incur as a result of the start of a trade war with the European Union, and decided to abandon plans to levy European imports. In addition, almost all US allies in NATO are members of the European Union, and in the current situation they did not want to aggravate relations with military-political partners in Washington.
Thus, the edge of American protectionist policies directed against China. Donald Trump accused China not only of overly aggressive trade policy and expansion into the American market, but also of stealing advanced technologies and blackmailing American companies, which, in order to receive Chinese investments, had to tell China the secrets of their technological innovations. These are very serious accusations.
At first, Beijing tried to warn the United States against the start of a trade war, emphasizing that not only the Chinese, but also the American economy would suffer as a result of the introduction of duties. However, faced with trump’s stubbornness, the PRC leadership was forced to move to retaliation. China has introduced duties and fees on some articles of American imports. At the same time, officially, China still seeks to demonstrate a complete peacefulness towards the United States and stresses that in the interests of peace, all global trading partners should cooperate freely.
The main task of Trump's policy in the trade war with China is to shield the American market from high-tech Chinese goods, which are sold much cheaper and are a serious competitor to American products. Trump accuses Chinese investors of acquiring stakes in American high-tech companies to learn all the technological secrets that are then used to manufacture similar Chinese products that are shipped to world markets at lower prices. The use of Western technology in combination with cheap Chinese labor over the past decade has given China tremendous advantages, bringing its economy to the positions it now occupies. Therefore, in the United States, a trade war is perceived, perhaps not as perfect, but as one of the few possible moves against the PRC.
But for us the question of how Trump’s new tariff policy will affect Russia is more important. According to most experts, although, of course, Russian companies will incur certain costs, they will not be as significant as those from other countries. The Russian economy, firstly, is self-sufficient to a certain extent, and secondly, the USA is not among the priority importers of Russian steel and aluminum. So, in 2017, Russia supplied 4,1 million tonnes of steel products to the USA. Steel accounts for less than 10% of total exports from Russia to the USA. As for aluminum, for the company UC Rusal, the Trump duties do not pose a threat at all - only 2% of exports are sent to the USA, therefore the company is easily reoriented to other markets. For her, it will even be useful, since new markets may be more profitable and promising than the US.
The deterioration of relations with the United States after the crisis in Ukraine led to the fact that the positions of Russian companies in the domestic market and in other markets only strengthened. As the sanctions associated with the events in Ukraine have positively influenced the development of domestic industry, so the tariffs introduced by Trump will only contribute to the further development of other markets by the Russian manufacturer, primarily the markets of developing countries in Asia, Africa and Latin America. It turns out that the measures taken by Trump to limit the foreign presence in the US market will benefit the Russian economy. But the problems may arise from the Americans themselves, because due to the introduction of duties, the prices of imported products will rise, and not all types of products can be promptly replaced by American counterparts.
The trade war unleashed by Donald Trump, as a result, seems to be more of an anti-Chinese operation, which will have a negative impact on those countries that have always preferred to cooperate with the United States. It is for this reason that Trump had to create a “white list” soon after the declaration of duties, including not only Mexico, Canada and Australia, but also Argentina, the European Union countries, South Korea, Ukraine and a number of other states. Therefore, it’s hardly possible to say that Trump “declared a trade war against the whole of humanity” - Washington realized that such a scenario would lead to very negative consequences for the States themselves.
Information