Trump and Tarrifs

[006896]

Hi fellow Economists!
USA introduced 25% tariffs on imported steel and aluminium.
What are your thoughts on the economic impacts?
Here is a website if you want to know more: http://mobile.abc.net.au/news/2018-03-02/donald-trump-tariffs-not-great-for-australia-but-terrible-for-us/9502118
I'm new to economics, so it would be really awesome if some of you guys could offer your perspectives on how this decision will impact the economies of the nations involved.
Thanks!

[katgrace1]

Hi fellow Economists!
USA introduced 25% tariffs on imported steel and aluminium.
What are your thoughts on the economic impacts?
Here is a website if you want to know more: http://mobile.abc.net.au/news/2018-03-02/donald-trump-tariffs-not-great-for-australia-but-terrible-for-us/9502118
I'm new to economics, so it would be really awesome if some of you guys could offer your perspectives on how this decision will impact the economies of the nations involved.
Thanks!

Currently, the US and AUS are doing a deal to exclude Australia from the brunt of the tariffs. This will help ensure free trade between the two countries. From an economist's perspective, free trade is the way to go as it ensures scare resources are used effectively and efficiently. With the proposed tariffs countries and groups like the EU are already preparing to resort to retaliation by increasing tariffs on their goods. Through the proposed tariffs it will likely increase protectionism and potentially could undermine the efforts of organisations such as the WTO which aim to promote free trade. However, at the moment it is only 'proposed' and we will have to wait to see if it goes through.

[JTrudeau]

The fascinating thing is, I talked with a couple of my friends in the US, and they think they the tariffs are going to help the US more than hurt. Paraphrasing some of the arguments, the trade war between China and the US will eventually lead to the US winning because the US is more powerful (but is it?), and then the US will have a greater share of the commodities market (possibly even a monopoly), which will stimulate domestic employment and secure their political power.

I personally agree with katgrace1. This trade war means bad news, especially since Australia relies so much on both China and the US for trade (they're our top two weights in the TWI for a reason!). The WTO hasn't been particularly effective in recent years, so we've yet to see what the collateral effect is on other countries.