Stock Photography November 11, 2017, which shows workers in the construction of a building with steel structure in Mexico City (Mexico). EFE / Jorge Núñez / ARCHIVE
Stock Photography November 11, 2017, which shows workers in the construction of a building with a steel structure in Mexico City (Mexico). EFE / Jorge Núñez / ARCHIVE

Trump doesn’t understand wars or trade

With an announcement that has alerted the global market, the US president has assured that the new tariffs of 25% on steel and 10% on aluminum are tools for a …


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Trump has again challenged his commercial allies by imposing new tariffs on imported products, against the recommendation of his advisers and Republican leaders.

"We’ll be imposing tariffs on steel imports and tariffs on aluminum imports," the president said. "You will have protection for the first time in a long while, and you’re going to regrow your industries”.

As the Washington Post reported, the immediate response of the international market was the fall of the Dow Jones by 2%, reaching the end of Thursday at 420 points.

Going back to historical errors, the president seems to have forgotten that the last time the United States put some kind of steel tariffs in 2002, the country suffered a loss of up to 200,000 jobs in the industry.

However, the broader fear among its critics, and rightly so, was the response of the country's trading partners, which could take retaliation measures.

The president of the European Commission, Jean-Claude Juncker, announced that the European Union would impose tariffs on Harley-Davidson, on bourbon and on brands such as Levi's because "we cannot simply put our head in the sand".

For China, one of the largest steel producers in the world, the decision should be made with more caution and rejected the possibility of entering into "trade war" with the United States.

"What an extremely stupid move," said the vice secretary general of the China Iron and Steel Association, Li Xinchuang. "A desperate attempt by Trump to pander to his voters, which I think in fact runs counter to his ‘America First' pledge."

But the most affected countries will not be so noble in their answers.

For Germany, one of the leading steel exporters in Europe, Trump's measures are simply "unfathomable," according to the Post.

"With this, the declaration of war has arrived," said Bernd Lange, a German Social Democrat and head of the European Parliament's trade committee. "They have a mercantile trade model in their heads that dates back 200 years," he explained on national radio.

In Latin America, reactions were similar.

Brazil and Mexico are among the five main steel suppliers to the United States, according to data from the Department of Commerce, but the effect of the new tariffs would affect Brazil much more than its Central American counterpart.

"The government of Brazil receives the information with enormous concern," the Ministry of Industry and Foreign Trade of Brazil said in a statement, adding that it "expects to work constructively" with the US to avoid the application of tariffs, without ruling out "eventual complementary actions, in the multilateral and bilateral sphere, to preserve our interests".

However, these new measures come at a key moment for the negotiation of the North American Free Trade Agreement (NAFTA).

As explained by the BBC, "the Trump government's objective is to fight against the entry of cheap metals that arrive in the United States, mainly from China," but its side effects could do much more damage in Latin American countries.

Luis de la Calle, a Mexican economist, explained to the media that the country could "end up exporting more cars, refrigerators, stoves, washing machines and other products containing steel to the United States because the United States companies that manufacture them will be less competitive with the most expensive steel."

Even with this panorama, for economic analysts like José Luis de la Cruz, the tariffs that Trump wants to impose "have no economic justification". In his column for El Sol de México (in Spanish), De La Cruz explained: "the United States maintains a structural surplus with Mexico in steel smelting, manufactured products of iron and steel and in aluminum, and also of its manufactures."

Furthermore, the analyst said that the Mexican steel industry does not receive tax benefits or financing, which would increase the "unfair competition" and further weaken the Mexican industry.

"Today Donald Trump announces measures that go in a similar way to China, only that instead of developing an inclusion program, he wants to do it from the dominant role of his country, a confrontation that Trump rationalizes as a Trade War that it’s good and easy to win".


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