On Thursday, May 31, 2018 President Trump’s administration imposed new steel and aluminum tariffs on Canada, Mexico, and European Union; three of the US’ closest allies. The Atlantic Council’s Adrienne Arsht Latin America Center, in partnership with the Atlantic Council’s Global Business and Economics Program held a conference call the following day to discuss the regional and international implications of the tariffs. Below is the full audio recording and summary.
New Steel and Aluminum Tariffs: What does it mean for US Trade with Mexico, Canada and the European Union?
Jason Marczak Director, Adrienne Arsht Latin America Center Atlantic Council
Bart OosterveldDirector, Global Business & Economics Program Atlantic Council
Moderator: Katherine PereiraAssociate Director, Adrienne Arsht Latin America Center Atlantic Council
Katherine Pereira’s opening remarks emphasized how, after a temporary exception, the announcement of a 25% tariff on steel and a 10% tariff on Mexico, Canada, and the European Union has brought their respective economic and diplomatic relationships with the US to a critical point. Jason Marczak then explained that the tariffs were issued under the justification of national security and have generated retaliatory action from our historical allies. A US President has the ability to restrict imports under Section 232 of the Trade Expansion Act of 1962 if the Department of Commerce deems those imports a threat to US national security, which it has not happened since President Regan’s petroleum embargo on Libya in 1982.
Bart Oosterveld noted the international implications of the announcement, saying that the quality of the transatlantic relationship is in risk as the US’ long-term allies were confused and angered by the use of a national security argument against their countries. Jason Marczak detailed the response in North America, emphasizing that Prime Minister Trudeau called the tariffs an “affront”, while Mexico responded with similar outrage, specifically considering US-Mexican cooperation on a significant number of national security issues such as narco-trafficking. All three parties have taken countermeasures, setting tariffs on key US products and agriculture such as: mattresses, paper, maritime boats, whiskey, chocolate, pork, blueberries, and cheese. These counter-tariffs however, have delayed enforcement dates, giving time for possible negotiations with the Trump administration. At the G7 Summit, taking place on June 8 and 9 in Canada, the tariffs and trade will likely become be a main topic of discussion, although an official resolution addressing the tariffs is unexpected.
Oosterveld and Marczak discussed that President Trump campaigned on a promise of reviving the country’s steel and aluminum mills. The tariffs fulfill this promise in the short-term by creating some jobs among his base, but the US industry does not have the capacity to produce the amount of steel or aluminum required to meet the demand from the decrease in imports. Simultaneously, the price of imported and domestic steel and aluminum will rise, while the demand for imported goods facing the tariffs will likely fall. This will result in Canadian, Mexican, and European businesses passing the cost of the tariff to their products ultimately making US consumers paying more for the same items.