Diplomatist Magazine Diplomatist July 2018 | Page 27

COVER STORY
many major global economies. In most cases, this defi cit has
widened over the last decade. The trade defi cit with China,
especially, stands out, but America's trade defi cit with other
countries is also considerable. However, these fi gure do not
imply that international trade hurts the U.S. economy, nor do
they justify President Trump’s populist policies. The White
House administration has, nonetheless, gone ahead with
introducing trade restrictions and barriers as a strategy to
induce other countries to correct these imbalances. The European Union as Trump’s new foe
The U.S. ran a trade defi cit vis-à-vis the European Union
of $153 billion in 2017. This defi cit has been increasing for
the past nine years. Tensions between the United States and
the European Union have been rising ever since President
Trump announced his plan to introduce import tariffs on
steel and aluminium products from Europe. Although he had
already approved a combined tariff and quota on imports of
washing machines (along a similar measure on the import
In general, the President of the United States can only
impose trade restrictions without congressional approval if the
Department of Commerce fi nds that imports are threatening
the national security of the country, or if the International
Trade Commission of the U.S. determines that other countries
unfairly subsidise their fi rms or that fi rms of other countries
pursue price dumping. The Trump administration has so far
followed this line of argument, giving it the opportunity to
impose what it calls punitive tariffs on specifi c products and
countries.
The already imposed tariffs by the U.S., especially on steel
and aluminium, have triggered retaliatory measures by the
affected countries. If these measures lead to further tariffs, the
trade restrictions could easily escalate into a trade war. The
following sections look at some of the countries which could
be signifi cantly affected by such a trade war, and emphasise
the consequences of the protectionist trade policy for the U.S.
economy and the global rule-based trading system. of solar panels) in January 2018, the tariffs on steel and
aluminium marked a new peak in the tensions between the
European Union and the United States. The U.S. Department
of Commerce has been working on investigating the effect
of steel and aluminium imports on the U.S. economy, since
Donald Trump took offi ce. However, for a long time, the
ultimate scope of the trade measures remained unclear. In
particular, it was uncertain whether the U.S. would exempt the
European Union from customs duties on steel and aluminium.
Although President Trump initially announced that he plans
to exempt seven trading partners from the tariffs, including
the EU, he later revised his decision and on June 1, the United
States imposed a 25 percent tariff on steel imports and a 10
percent tariff on aluminium imports from the EU and several
other countries.
The United States is an important export destination for
the steel and aluminium industry of the EU. In 2017, the EU
exported $6.2 billion worth of steel and $1.1 billion worth of
Extraordinary and Plenipotentiary Diplomatist • Vol 6 • Issue 7 • July 2018, Noida • 27