Trump’s tariff plan for steel and aluminum imports

President Trump, who has assumed his second term in office, has sent shockwaves throughout the globe through his agendas and plans. Recently he took various controversial decisions, which included revoking birthright citizenship, freezing federal spending, removing leaders of other agencies, firing government employees subject to civil service protections, and deporting people. Three weeks into the administration, courts are already considering challenging his decisions that the federal government will recognize only two genders, a forked detective email offering federal employees to resign in exchange for full payments and benefits through September.Amidst the ongoing debate and controversies regarding his actions, yet another announcement from the president’s office has brought about a turmoil in the economic sphere. Trump announced he would impose 25% tariffs on all steel and aluminum imports, which is likely to have severe global implications. The tariffs are set to take effect in the upcoming week. Since the very first day Trump assumed office, he took a clear stand and showcased his determination to protect American industries and jobs at any cost, and the tariff imposition plan is a part of his big agenda of the protection policy. With European steel and aluminum stocks already feeling the pinch, shares in companies like Austria’s Voestalpine, ArcelorMittal, and Germany’s Salzgitter and Thyssenkrupp encountered a steep fall in early trading. Apart from its direct impact on the steel and aluminum industries, the tariff is also expected to impact other industries, such as automotive and construction, which rely heavily on steel and aluminum imports.While the news of tariff imposition led to several speculations, Jefferies suggests that despite the initial volatile reaction of the market, the effect shall subside, and tariffs are likely to have no long-term impact on the global economy. The firm also suggested that risky assets are becoming desensitized to Trump’s tariff announcements and that the market may be overreacting to the news. Jefferies opined that Trump’s major agenda is to use tariffs as a tool of negotiation and help the USA flourish in trade, and it is in no way a permanent measure, as the USA will also face counter-implications of such stringent measures.The tariffs have led to global tension in the trade world and have raised concerns about a potential trade war. The escalating tension has led to various steps and announcements by other countries as well. The imposition will not only affect other global economies and share markets but will also have a severe effect on America’s domestic economy as well. Trump’s main motive behind the tariff is to provide an edge to steel and aluminum producers within the domestic economy, who have been struggling at the hands of cheaper imports. Even though the move is done for the good of the USA, the decision is facing severe backlash from other countries, including China and the European Union. China has already announced its plans to impose counter-tariffs on American goods, while the EU has threatened to counter America’s move with its own tariffs on American products. The move is also likely to face opposition from other industries within the USA itself, such as the automotive and aerospace industries, which rely heavily on imported steel and aluminum as raw material for production, since tariffs will increase their cost of production. The impact of the tariffs on the US economy is still unclear and has led to speculations from all segments and financial analysts.True to life had a conversation with finance analyst Rohit Somani. He said, “Traffic imposition could lead to higher prices for consumers and potentially even job losses in industries that use aluminum and steel as their raw material and may even slow down the production process. The federal decision by the American government is also likely to invite legal challenges from other countries, and domestic industries may also move to court for infringement of their rights, which could lead to a prolonged and costly trade dispute. In conclusion, the move is likely to create more disputes than resolve issues”.