In 2018, the then President of the US, Donald Trump, imposed 25% tariffs on steel imports to

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Question:

In 2018, the then President of the US, Donald Trump, imposed 25% tariffs on steel imports to the US. In December 2021, UK trade secretary Anne-Marie Trevelyan threatened that the UK could step up retaliatory measures if these were not removed. Drawing on the two articles below,

1. Describe the effect of a tariff on steel for US and UK producers and consumers.

2. Discuss the ways in which governments respond to the imposition of tariffs and how this has played out in terms of the example of steel for the UK and US economies.

Extract 1

UK warns US of retaliation over steel tariffs

(By Chris Morris, 4 March 2021)

The International Trade Secretary, Anne-Marie Trevelyan, has warned the US the UK could step up retaliatory measures if punitive tariffs on UK steel exports are not lifted soon.

She has been in the US for talks with the Commerce Secretary Gina Raimondo.

On her return, Ms Trevelyan said 'we had a very frank conversation'.

'I was very clear that the pressures we are under to use countervailing measures if we can't solve the problem are becoming more acute', she said.

Ms Trevelyan said she had invited Ms Raimondo to London for further talks on the issue in January. But by then, UK companies will be at a competitive disadvantage compared to companies based in the EU.

'I am very keen that we solve this with what is our closest ally in the US through a positive removal' of the tariffs, Ms Trevelyan said.

She said that resolving the dispute would benefit workers and businesses on both sides of the Atlantic.

The Trump-era tariffs of 25% on steel exports (and 10% on aluminium exports) were imposed when the UK was part of the European Union.

The EU and the US have now concluded an agreement that will see them lifted from 1 January. But the tariffs on UK producers remain.

When asked why further talks with the US weren't happening before 1 January, Ms Trevelyan said the US chose to have a discussion with the EU first because it was a larger trading partner.

If the issue isn't resolved quickly, the UK could increase existing retaliatory tariffs on products such as US whisky and cosmetics.

It could also broaden the scope of the retaliatory measures to include other items, including lobsters, electric motors and orange juice.

US President Joe Biden has so far refused to cancel the measures put in place by his predecessor.

Hopes of a post-Brexit US free trade deal have waned after Mr Biden said such agreements were not a priority while he focuses on his domestic agenda.

There have been breakthroughs, however. In June the UK and EU reached deals with the US to suspend tariffs for five years over subsidies given to aircraft makers Airbus and Boeing.

(Morris, 2021)

Extract 2

UK labor unions warn jobs at risk in US steel tariffs row

(By Emilio Casalicchio, 2022)

The Trades Union Congress said jobs are on the line.

LONDON - Britain's failure to end a long-running steel dispute with Washington is putting jobs and livelihoods at risk, trade unions have warned.

The national federation of trade unions in England and Wales - alongside the three labor unions representing steelworkers - urged the U.K.'s trade department to act after punishing tariffs on British steel manufacturers bit harder.

Since the start of this month, the Donald Trump-era tariffs on steel imports into the U.S. have no longer applied to the EU under a deal between Brussels and Washington. But the U.S. has refused to do the same deal with Britain while the post-Brexit status of Northern Ireland remains uncertain - putting U.K. steel at a competitive disadvantage.

Frances O'Grady, general secretary of the Trades Union Congress, said roles could disappear in the sector unless Britain seals a deal with Washington.

"We are concerned by reports that the U.S. may be stalling due to the U.K.'s failure to honor commitments under the Northern Ireland protocol," she told POLITICO. "Ministers must act in good faith on the international agreements they have made as this is putting U.K. jobs at risk."

Alun Davies, the national officer of steelworkers' union Community, said the government must "urgently" strike an agreement to remove the tariffs. "Our steel industry was already at a competitive disadvantage due to higher electricity prices than our European competitors, and the continuation of these tariffs only worsens the problem," he added.

"The British steel industry is the backbone of the U.K. economy, providing quality jobs, supporting communities and supporting key industries. We need the government to properly support the industry by creating a level playing field."

The Unite union, which also represents steelworkers, said the failure to resolve the tariff issue was "potentially disastrous" for the sector. National Officer Harish Patel said the U.S. market is a massive one for U.K. steel, with the industry exporting millions of tons every year.

Before Trump imposed the tariffs under the guise of national security, the U.K. in 2017 sent 350,000 tons of steel to the U.S. In 2020 that had plummeted to 200,000 tons.

"The U.K. government must immediately ensure that the tariff on U.K. steel is lifted," Patel said. "If it is unable to do so it must explain the full reasons why the EU secured the lifting of the tariff but the U.K. has failed."

Ross Murdoch, the national officer for the GMB union, said: "The tariffs on U.K. steel exports represent a critical threat to the future of our industry. The government's failure to negotiate the same terms as the EU's agreement is already hurting steel, and without a remedy our exports risk being uncompetitive. Ministers must secure agreement to lift the tariffs as a matter of utmost urgency."

International Trade Secretary Anne-Marie Trevelyan held talks on the issue in Washington last month but failed to secure a breakthrough. She invited U.S. Commerce Secretary Gina Raimondo for further talks in London this month, although she has not received a response to the invitation. Some on the U.S. side expect a trip by Raimondo will not to go ahead this month and for the can to be kicked down the road.

The U.K. trade department said ministers are working to resolve the dispute as soon as possible, and pointed to unrelated government support for the steel sector since 2013. It also reiterated the threat that Britain could up its own retaliation tariffs on U.S. goods.

"We recognize the vital role the steel sector plays in our economy, and our priority is to resolve this dispute to the benefit of workers and businesses on both sides of the Atlantic," a spokesperson said.

(Casalicchio, 2022)