US tariffs: Saving local industries and jobs
The recent imposition of heavy tariffs by the US President Donald Trump on imported steel and aluminium is likely to trigger a global trade war if countries affected by these tariffs retaliate by imposing similar tariffs on US goods. The justification offered by Trump for imposing the tariffs was that these were necessary to boost the US industrieswhich were ostensibly suffering from “unfair” business practices of other countries.
As per the proclamations signed by Trump, 25% import tariff would be levied on steel and 10% on aluminium imported from all countries, except Canada and Mexico. Countries seeking exemption form imposition of these tariffs will have to negotiate with US Trade Representatives.
Trump justified the tariffs stating that the US industries have been targeted for decades by 'unfair trade practices' of other countries, leading to shutting down of plants and mills, laying off of millions of workers and 'decimation of entire communities'.
The imposition of tariffs by Trump has far-reaching consequences for the global trade. If all countries were to impose such tariffs to “provide a level playing field” to their domestic industries, the global trade as we know will be a thing of the past. We would be going back to the era when high tariffs on imports restricted trade between nations to the minimum. The result was that the domestic industries thrived at the cost of the domestic consumers, who had no option but to pay high prices for goods that could be imported at cheaper prices from other countries.
Of course, there is other side of the coin too. After opening up of the global trade in the 90s, some of the countries resorted to dumping of cheap goods into other countries, which resulted in closure of domestic industries and large-scale unemployment. This prompted the affected countries to impose anti-dumping duties on such goods. India too has been affected by large-scale dumping of goods by China and has imposed anti-dumping duties on some of the Chinese goods. The US is ostensibly doing the same to save its industries and jobs of its workers.
There is a need to find some viable solution to the problem of dumping, so that the domestic industries and jobs are saved, even while the domestic consumers get the goods at reasonable prices and are not made to pay a high price for saving the domestic industries.