Trump steel and aluminum tariffs target a deeper problem – but risk job losses and higher prices | Money news Aitrend

Few materials count as much as steel and aluminum.

Steel, an iron and carbon alloy, is the main metal ingredient of the structures in which we live and the bridges that we build. If it is not in steel, it is made with steel.

Aluminum, however, is a wonderful material that we use with Wild Abandon these days. A light metal that we use in plans and trains, in the body of electric vehicles And in these high -voltage power lines, we will need so many people to provide electricity in the coming years.

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All this is to say that these metals are the foundation for a large part of the world around us. And like most of the economies developed, the United States is far from independent with regard to these materials. The degree of dependence on other countries varies with each other.

According to the US Geological Survey, the “ratio of use of net importation” for aluminum is close to 50%, which implies that it depends deeply on imports to meet demand among its societies. The degree of dependence is considerably lower for steel – just over 10%.

At least part of the idea Behind the prices is to bring back a certain production to the United States, but impose them will have consequences.

What types of consequences? Well, to its simplest, prices increase prices. It is, when you think about it, blindly obvious. A price is a tax on a good entry into the country. So, if aluminum and steel increase in prices, it means, the rest equal, that the cost of everything, from aircraft wings to steel rivets also increases. This in turn means that consumers end up paying the price – and if a company cannot reach both ends in front of these prices, this means job losses – perhaps in the very industrial sectors that the president wants protect.

So says economic theory. But in practice, the economy is not everything. There are countless examples through the history of countries defying economic logic in search of other objectives. Perhaps they want to improve their national autonomy in a given product; Perhaps they want to make sure that certain jobs in cherished areas or industries are protected. But nothing comes for free, and even if Donald TrumpThe prices manage to persuade national producers to sow more aluminum or steel, such things do not occur overnight. In the short term, it is difficult to see how these prices would not be significantly inflationary.

There is a deeper problem here, which comes back (as M. Trump’s economic measures do) China. The steel and aluminum markets have faced enormous influx of cheap Chinese metals in recent years – insofar as these last months, these Chinese imports have been cheaper than the cost of production in Europe .

To a certain extent, it is a consequence of high European energy costs, but it is partly because China subsidizes its producers more than most other countries in the world. Indeed, of all the products of the world, few have had as many cases housed at the World Trade Organization as steel.

Learn more:
Why could China benefit the most of Trump’s prices
Tax hikes and financial gloom “acting as brakes” on jobs

But even if it is worth being aware of these dynamics, which push inexpensive steel in many markets, it should also be noted that the United States is much less from China than you would have thought. The vast majority of American aluminum imports, for example, come from Canada rather than China. All rates on the metal would be more able to know the economic relationship between these parts of North America.

Of course, it now depends on the structure and detail of these prices – and the measure in which they are really implemented. As with its threatened prices Canada And MexicoThese raise as many questions as they answer. It is probably the way for things for a large part of this presidential term.