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Luis BARRUETO is a journalist from Guatemala. Studied business and finance journalism at Aarhus University in Denmark and City University London.
Donald Trump imposed new tariffs on steel and aluminum imports to the US, leading to strong reactions around the world and talk of a new "trade war". But what do the new 25% tariff on steel imports and 10% tariff on aluminum imports really mean? In Trade Talks, a podcast by the Peterson Intitute of International Economics, The Economist's Soumaya Keynes and trade researcher Chad Bown explore what is behind the headlines.The first thing to reckon with is that Trump's announcement was full "not only of exceptions, but threats, incentives, and uncertainty" in another show of Trump's "departure from a consistent rules-based approach to global affairs", Bown explains elsewhere.
Trump agreed to exempt Canada and Mexico from the new tariffs for 30 days while North American Free Trade Agreement (NAFTA) renegotiations continue. But then he left open the possibility of reversing course if the outcome of the renegotiation of NAFTA is not to his liking. Both Canada and Mexico said they would not be bullied into a deal that sets them at a disadvantage.
US Allies Not Keen On Trump's Snap Move
The European Union, second largest foreign source of US steel and aluminum after Canada, has also lined up its retaliatory tariff response. If Trump imposes his announced tariffs, the EU will hit back by raising levies on US exports of cranberries, blue jeans, and bourbon.
The Trade Talks episode goes deep into the implications for the rules-based global trade system, and explores what options are available to address the situation at the World Trade Organization (WTO). Yet, Trump’s decision is more broadly a threat to US relationships in the Western Hemisphere.Beyond what it means for already sour NAFTA talks, Trump's tariffs will have a rather small effect on imports from China, hurting North American allies like Canada, the EU, Japan, and South Korea.