Question

Think of the ‘legacy cost’ problem associated with those US steel firms which face the prospect of bankruptcy.  That is, the problem of retirees having their firm-provided pensions and health benefits threatened.  Many commentators agree that a suitable policy response to this issue would be the US government putting a strong emphasis on assisting with legacy costs provided that the steel companies concerned permanently close their high-cost steel plants.  By contrast, the use of tariffs (taxes on imported steel) has been widely criticized.  So why is the use of tariffs, in some ways, a politically easier option?  Also consider the steel tariffs put in place by President Trump.  Note which exporting countries are most heavily impacted

Answer 1

Tariffs are a specific amount of taxes imposed on imported products at the borders of nation.

Tariffs are proposed by the governments inorder to raise their revenue, to save domestic companies or to apply a political influence or strength in other nations. It also increases the consumer prices. The tariffs are also used to limit the imports by rising the good prices that had been bought from another nation and as a result making these products less attractive to the cosumers in the domestic level.

It is able to make the domestic products more attractive or cheaply accessible to the consumers by increasing the tariffs on foreign goods. Thus the government can protect the domestic firms.

Dinald Trump imported the first tariffs on washing machines and solar panels. After this, the trump administration imposed tariffs on aluminum. On march 2018, Donald Trump imposed taxes on steel by an average of 25%. By the june, 25% of tariffs were imposed on the complete steel which was imported and 10% tariffs on aluminum which was imported from European Union. Due to the tariff, the US steel industries is unable to import the steel due to excessive cost. Thus the competition among the american manufacturers had lost and many of the workers lost their job.

The exporting countries which are highly affected by these tariffs are china, European union, mexico and canada.

Thanks"..