Trump Steel Tariff's Triple Tantrum: Stocks Sink, GOP & EU Voice Outrage
Mike (Mish) Shedlock | Mar 02, 2018 02:32AM ET
Trump announced sweeping new tariffs on steel and aluminum. The stock market threw a tantrum and so did GOP leaders.
Feature images is of a steel mill in Germany from the a
At a White House meeting on Thursday, President Trump said that he did not want any nation to be exempted from the order.
GOP Tantrum
GOP leaders unleashed a verbal attack on Trump over his plan to impose steel, aluminum tariffs .
Republicans in Congress broke ranks with the president in an unprecedented way, with one after another coming forward during the day to caution about the dangers of tariffs and plead with Trump to hold off on any action.
"My advice was...that you've gotta be careful here, you get into a tariff war," Sen. Roy Blunt, R-Mo., told reporters. "SoI would prefer that this was not where we were."
Canada, a U.S. ally and large trading partner, said Thursday that it views "any trade restrictions on Canadian steel and aluminum as absolutely unacceptable."
Senator Orrin Hatch said, "I don't believe tariffs work very well and, secondly, it creates tariff wars."
EU Tantrum
The EU also threw a hissy fit, promising a firm response . Rhe European Commission chief executive Jean-Claude Juncker said in a statement:
We strongly regret this step, which appears to represent a blatant intervention to protect U.S. domestic industry and not to be based on any national security justification,
We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk ... The EU will react firmly and commensurately to defend our interests.
Stock Market Tantrum
Costs
According to the World Steel Association , buildings and infrastructure use 50% of global steel production. The article also notes nearly 95 million vehicles were produced in 2016. On average, 900 kg of steel is used per vehicle. That's 1,102 pounds of steel per car.
The cost of infrastructure replenishment just rose significantly as did building construction costs. The automakers were not pleased with this announcement. They are already on very soft footing.
Fair Trade, Free Trade, Smart Trade
Get The News You Want
Steel production jobs gained, if any, will be at a cost of higher expenses, lower production and more jobs losses in every other sector of the economy.
Here is the formula Trump desperately needs to understand.
Fair Trade = Free Trade = Smart Trade
Trump's move is very foolish. Other nations will retaliate and net exports will sink.
The saddest part of this setup is Trump's tax cuts are guaranteed to increase the trade deficit as well as the budget deficit. Matters will get worse.
For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade" and 'Disputing Trump’s NAFTA 'Catastrophe' with Pictures: What’s the True Source of Trade Imbalances?"
Trump's trade policies are set to exacerbate the next global recession, but economic illiterates are egging him on.
A global trade war looms.
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