Donald Trump, the President of the United States of America, said overnight that he will implement a 25% tariff on foreign steel next week. The S&P 500 Index, which is a US stock market index, dropped by 1.33% on Thursday in response to the news.
The President also said that he would impose a tariff of 10% on imported aluminium to protect American workers and national security.
Donald Trump said, “We’re going to build our steel industry back and we’re going to build our aluminium industry back”.
Experts fear that these tariffs could start an international trade war between the USA and China.
New Federal Reserve chairman Jay Powell said that international trade was a net economic benefit and that tariffs were not the best way to fix the negative effects like lost jobs.
The President believes that the US is suffering from unfair trade with China, he tweeted the following:
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) March 1, 2018
This tariff is expected to hurt USA’s allies more than it will hurt the Chinese. According to US government statistics, China is only the 11th biggest steel exporter to America. Canada, Japan and South Korea are all bigger exporters to the USA.
In response the Canadian Foreign Minister, Chrystia Freedland, said that any tariffs would be “absolutely unacceptable”.
European Commission President, Jean-Claude Juncker, said: “the European Union will react firmly and commensurately to defend our interests”.
US Speaker of the House Paul Ryan’s spokesman said that he hoped the President “will consider the unintended consequences of this idea and look at other approaches before moving forward”.
Donald Trump is sticking with his campaign pledges. During the campaign he said: “We need great steel makers, great aluminium makers for defence. When our country can’t make aluminium and steel…you almost don’t have much of a country”.
Following news of the tariffs, shares of ASX-listed BlueScope Steel Limited (ASX: BSL) were trading higher while Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) were more than 1% lower on Friday, according to Google Finance.
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