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Trump’s Trade War: Who’s in the firing line?

With the trade spat escalating to cover more and more products since the initial salvo earlier in the year, what products and countries are currently in Trump's crosshairs?
US flag in front of America first sign with other flags in the background
Which country could be next for the tariff treatment?

Since the start of 2018, US President Donald Trump has been throwing around threats of trade tariffs, and in many cases has begun imposing them on various types of US imports.

The main headline grabbers have not only been Trump’s simmering trade battle with China - although some would argue it was expected, given his campaign rhetoric - but also newer feuds that have broken out between the US and some of its most steadfast allies, including the European Union and Canada.

With the White House currently assessing the potential for 10% tariffs on a further US$200bn on Chinese goods, and the Beijing government poised to respond in kind, it is good to take a look at what products Trump has decided to turn his ‘tariff gun’ on, and which countries are bearing the brunt.

Steel and Aluminium

The steel and aluminium tariffs are probably seen by many as the sparking point of the trade tangle the global economy now finds itself in, and what has caused the most tension between the US, its allies, and China.

To date, the US has placed a 25% and 10% duty respectively on steel and aluminium imports, covering around US$48bn of imports, with most of these coming from allies such as Canada, the EU, Mexico, and South Korea.

Surprisingly given his previous rhetoric, only 6% of the imports covered by these tariffs come from China, mainly due to previous US restrictions on 94% of steel imports from the country.

Despite initial exemptions, Trump eventually decided to impose the tariffs on the EU, as well as fellow members of the North American Free Trade Agreement (NAFTA), Mexico and Canada.

The only countries that appear to have escaped unscathed are Argentina, Australia, and Brazil, who were all granted indefinite exemptions. South Korea also escaped tariffs with a permanent exemption but was then hit with a quota which cuts its exports of steel to the US by 21.2%.

In response to the new tariffs, the EU has retaliated by slapping €2.8bn of duties on a variety of US goods, ranging from bourbon whiskey to Harley Davidson motorcycles.

The effects of these retaliations are already being felt, with Harley Davidson announcing on 25 June that it was shifting some production for European customers out of the US to avoid the tariffs, causing a blow to one of Trump’s key voting demographics - blue-collar workers in the Mid-Western ‘rust belt’.

 

The Chinese government also issued its own set of retaliatory tariffs on US$2.4bn of US exports including aluminium waste and scrap, pork, fruits and nuts.

Not wanting to be left out, Canadian Prime Minister Justin Trudeau announced US$16.6bn in retaliatory duties, calling it “inconceivable” that the country was considered a national security risk, the reason used by the Trump administration to justify the initial imposition of tariffs.

Technology and Intellectual Property

Following the results of an investigation initiated by the US in August 2017, the Trump administration released a list of 1,333 Chinese products under consideration for 25% tariffs in April, citing the investigations report that China was conducting unfair trade practices relating to technology transfer, intellectual property (IP) and innovation.

The top sectors targeted for these tariffs were machinery, mechanical appliances, and electrical equipment which totalled around US$46.2bn in US imports.

The Chinese responded with their own list covering 106 US products including vehicles, aircraft, vessels, and soybeans totalling US$49.8bn of its imports from the US.

Not wanting to be outdone, Trump asked US trade officials to consider tariffs on an additional US$100bn of Chinese exports to the US, before releasing a revised list on 15 June, covering the same amount but more heavily targeting intermediate inputs which could damage supply chains for US companies.

In response, the Chinese revised their own list, which now targets more agricultural products as well as petroleum products and medical equipment, while removing aircraft from the list.

Cars and auto parts

A slightly newer development compared to the other tariff disputes, but what seems to be the next step in the saga is the automotive industry, with Trump’s latest proposal to slap 20% tariffs on EU car exports in response to the bloc’s reaction to the US steel and aluminium duties.

The spat was preceded by a US Commerce Department investigation begun in May to evaluate the national security risks of importing cars and auto parts to the US from foreign markets.

Washing machines and solar panels

A somewhat lesser known aspect of Trump’s tariff crusade, washing machines and solar panel imports were hit with US$1.8bn and US$8.5bn in duties in January after a report by the US International Trade Commission found that imports of these goods had caused injury to US producers of the targeted products.

Shortly after these tariffs were introduced, China began investigating potential tariffs on US exports of sorghum (a type of cereal crop) worth around US$1bn.

While this was not explicitly reacting to the tariffs on washing machines and solar panels, the timing suggested a repeat of China’s retaliation to former US President Obama’s safeguard tariffs on tyres in 2009.

Beijing then followed through in April with 178.6% antidumping duties on sorghum imports from the US, although these were ended in May after trade negotiations with the US.

However, the US wasn’t completely unscathed, as earlier that month, South Korea filed a dispute with the World Trade Organization (WTO), claiming the tariffs on washing machines and solar panels were a breach of its rules.

That is the list so far, but there are sure to be more twists and turns as the US prepares to fire the next shot of its Chinese trade spat on 6 July.

More to come?

On 10 July, the White House revealed that it was currently assessing the potential for 10% tariffs on a further US$200bn of Chinese goods ranging all the way from fish to luggage.

However, these new tariffs, while formidable, are not scheduled to take effect for another two months, giving time for both US industry to adapt to the new levies and for any potential negotiations that could prevent the global trade war from escalating.

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