Question

1. What is the Trump administration’s concerns with the economy and trade in particular?

2.Many of the proposed trade restrictions are designed for China. What are the concerns with trade with China?

3. What tariffs have the Trump administration proposed or implemented? Why? What is the purpose of these tariffs?

4. What companies or industries benefit from the tariffs? Who is hurt by the tariffs? How have other countries, particularly China, responded? What are the other choices of dealing with the administrations trade concerns?

Answer 1

1.

• President Trump’s decision on tariffs seems to have been driven by a desire to do something about America’s high level of trade deficits.
• What Trump is proposing to do is to impose a tariff of about 25 percent on steel imports and 10 percent on aluminum imports to try to preserve jobs in the steel and aluminum industries and help those industries—which have been declining for a while—grow.
• President Trump hopes these tariffs will help the U.S. economy grow faster both in terms of output and employment.
• Though in theory a trade deficit could cause economic concerns, the correct way to view a trade deficit is not as simply a country losing out, but rather as a combination of macroeconomic factors and policies that drive consumption and investment decisions.

2.

President Donald Trump launched the next salvo in his widening war on Chinese trade abuses, this time taking aim at China's unfair seizure of US intellectual property.

Trump on Thursday directed the US trade representative to level tariffs on about $50 billion worth of Chinese imports following a seven-month investigation into the intellectual property theft, which has been a longstanding point of contention in US-China trade relations.

In addition to the tariffs, the US also plans to impose new investment restrictions, take action against China at the World Trade Organization and the Treasury Department also will propose additional measures.

Trump signaled the tariffs would affect "about $60 billion" of Chinese imports, but administration officials said the figure would be closer to $50 billion.

3.

• A trade war is essentially an escalating set of tit-for-tat trade restrictions imposed on each other by some trading countries.
• Ultimately, no one wins a trade war. It creates concerns for the economy that reduces consumer and business confidence, which means there is less consumption and less investment in the economy.
• Businesses all across the world are connected through supply-chains. The disruption of supply chains due to trade barriers could end up hurting all businesses, including American businesses.
• A trade war might sound very good from a martial perspective or from a political perspective but, in terms of economic benefits, there are not many.
• The actions threatened and taken by the Trump administration have significantly undermined America’s role as a proponent of free trade. It has created the notion that America is not a trustworthy or reliable partner when it comes to trade or other economic issues.
• These tariffs certainly reduce America’s influence in terms of international engagement, and creates a void, that other countries like China, are too willing and happy to step into.
• The U.S. thinks it has a lot of leverage when it comes to international trade negotiations because it has the largest economy in the world and the largest single country export market.
• Secretary Mnuchin seems to believe that, even though the U.S. walked away from the Trans-Pacific Partnership (TPP) agreement, the other countries would be happy to take the U.S. back if it expresses interest in a revised TPP.
• The 11 other countries in the TPP have already gone ahead with a revised version of the agreement and, at this stage, it is very unlikely they will reopen the negotiations to bring the U.S. back in.
• The reality is that when the U.S. steps back, the rest of the world moves on, and they do not want to include the U.S. anymore.

4.

Business leaders from nearly every American industry are furious with President Trump right now.

They’ve been pressuring his administration to back off from its plan to add steep tariffs on imported steel and aluminum, which are used to make everything from cars to boats and even soup cans.

But the president has waved off their concerns. On Thursday afternoon, Trump is expected to sign an order directing the Commerce Department to add the 25 percent levy on steel and the 10 percent levy on aluminum. He did say, however, that his administration will exempt Canada and Mexico from the tariffs for a while.

The US steel industry is quite happy about the tariffs.