Globalization has its own pros and cons. But the cons have become ugly especially when countries retaliate against each other in terms of taxes, duties, and tariffs.
America’s duties on steel were proposed to be 25% on steel imports and 10% on aluminum imports.
European nations will target popular exports from America such as blue jeans, motorbikes and bourbon whiskey.
Trade Commissioner of the European bloc, Cecilia Malmstrom said, “The unilateral and unjustified decision of the US to impose steel and Aluminium tariffs on the EU means that we are left with no other choice”.
It all began when Donald Trump started imposing ridiculous duties due to the oversupply of steel and Aluminium from China which has threatened local producers.
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These have also led to affect the trade from South Korea, Argentina, Australia, and Brazil in terms of the amount of goods that can be exported.
There are several complaints to the World Trade Organization following such heavy tariffs. India and Norway are reported to have filed a complaint to WTO.
America is being warned by the International Monetary Fund of playing protectionist policies that could hurt the whole US economy and falter the world’s trade system.
IMF director Christine Lagarde used strong words such as “losers on both sides” and has a serious impact.
It’s already starting to affect American citizens, with a spike in the price of steel. US Commerce Secretary Wilbur Ross has warned against “illegitimate profiteering“.
American Senator’s have signed a bill to limit the administration’s authority on trade. One such co-sponsor is US Senator Pat Toomey, who says that the whole move of metal tariffs is ‘wholly inappropriate.’
“Our response is measured, proportionate and fully in line with WTO rules. Needless to say, if the US removes its tariffs, our measures will also be removed,” bloc’s trade commissioner Cecilia Malmstrom concluded.
The trade battles will continue to raise major consequences to the world economy.