The article is entitled Why tariffs on steel and aluminium are easier said than done. Please first
Question:
The article is entitled “Why tariffs on steel and aluminium are easier said than done”.
Please first read carefully the article and explain whether and why you agree or disagree.
here is the article transspict
HISTORY will rhyme on March 23rd, when Donald Trump’s tariffs
on steel and aluminium imports are due to come into force.
Several previous presidents, from Ronald Reagan to Barack
Obama, also used tariffs in an attempt to protect America’s steel
producers from foreign competition. (There are historical echoes,
too, in Mr Trump’s plans to slap tariffs on a range of Chinese
imports; in the 1980s Japan was the target.) A rhyme is not a
repeat. But past experience is not encouraging.
The central problem for America’s policymakers is that trade is
like water. Block its flow in one place and pressure builds
elsewhere. When many countries are covered by tariffs, trade
may simply be diverted through those countries that are let off
the hook. Importers will howl for exemptions. As a result,
whatever the Trump administration’s broader ambitions with
respect to trade, bellicose unilateralism will make them harder to
achieve.
In 1982 America browbeat the European Community, the
forerunner of the European Union, into limiting its steel exports to
America. But compensating flows from other countries were so
great that America’s steel imports increased overall. Exemptions
for Canada, Mexico, Israel and Jordan when George W. Bush
imposed tariffs on steel imports in 2002 allowed the value of their
exports to America to surge by 53%. Canadian and Mexican
exporters, who are exempt from the latest tariffs, already account
for a big share of American imports (see chart 1). They could
clean up.
In an attempt to stop such substitution Robert Lighthizer, the
United States Trade Representative, is said to be offering to spare
America’s allies from the tariffs if they ensure their exports to
America do not exceed the level in 2017. On March 21st he hinted
that negotiations could last until late April. But such a deal would
break the World Trade Organisation’s rules, and put bureaucrats,
not markets, in charge of allocating export rights.
When different countries receive different treatment,
circumventing tariffs looks more tempting. Under Mr Obama,
America imposed hefty anti-dumping duties on imports of Chinese
steel. Inflows from China duly fell, but those from Vietnam surged.
America’s Commerce Department recently concluded that some
steel imports, supposedly from Vietnam, actually originated in
China. Mr Trump expects Canada and Mexico to ensure they do
not become conduits for steel originating elsewhere. But that may
be hard, especially for the generic, less processed stuff.
Mr Trump’s tariff barriers are broader than Mr Obama’s were.
That makes circumvention harder—but also means importers will
squeal more loudly for exemptions. After Mr Bush’s steel
safeguards were applied to the EU and Japan in 2002, companies
cut off from their suppliers expended much time and money
pleading their case in Washington. Eventually 1,022 exemptions
were granted, over 90% of them to firms importing from Japan
and the EU. This time, the Trump administration expects to spend
24,000 worker-hours processing 4,500 requests to exempt steel
products and 1,500 pleas for aluminium. Lobbyists are rubbing
their hands.
Metal consumers will also seek to be spared pricier inputs, which
can threaten jobs. In 2002 the employers of Gordon Jones, a steel-
drum loader, were thwacked with a 30% tariff. “They say that
these tariffs are supposed to help workers, to save steel jobs, but
what about me?” Mr Jones asked a congressional hearing. More
such complaints will come, since steel-consuming sectors account
for far more American jobs than steel production
ariffs are not Mr Trump’s only trade policy. As well as trying to
rewrite the North American Free-Trade Agreement, he is trying to
curb China’s trade power. Whatever the merits of these aims, the
new tariffs will make it harder to rally allies to his side. “Issues
like this have a way of overtaking any meeting or any discussion
you’re having,” says Wendy Cutler, a trade negotiator under Mr
Obama.
Bill Brock, who was the United States Trade Representative under
Reagan, recalls negotiating trade restrictions with Japan in the
1980s. Even amid tensions, he remembers treating Japanese
negotiators with respect, knowing that harm to one part of the
trade relationship could affect others. Tariffs are “single-shot
measures to deal with single issues”, he warns, and risk
complicating efforts to resolve broader ones. “Of all the stupid
self-defeating things we can imagine, a trade war is the top of the
list.”
End of the article
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley