Macroscope | Trump is impetuously turning campaign rhetoric into action, and that’s cause for concern
Trump’s import duties on metals would hardly cause a dent in reducing the US trade deficit, and have negligible impact on China’s economy. But his move from campaign rhetoric to action is cause for concern
President Donald Trump’s decision to impose tariffs on US imports of steel and aluminium has reignited fears of trade protectionism and triggered volatilities in global financial markets.
The latest move to put 25 per cent on steel and 10 per cent levies on aluminium imports has come after specific measures against imports of Chinese solar panels and washing machines earlier in the year, suggesting that Trump is getting serious about trade protectionism.
But contrary to previous episodes, the global market has reacted with more concern this time.
We think this partly reflects the fact that Trump is no longer making empty threats, but turning hawkish rhetoric into actions.
In addition, the scope of his latest move is more far-reaching, with targets of the tariffs ranging from “strategic competitors” such as China and Russia, to traditional allies such as the EU, South Korea and Japan. Even though Canada and Mexico are initially exempted, Trump has threatened to claw them back in if they fail to treat the US “fairly” in future Nafta re-negotiations.