How Will Import Tariffs Affect Global Trade?
Import tariff on steel
In the above part, we saw that President Donald Trump announced a 25% import tariff on steel. This announcement boosted US steel stocks.
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On February 16, 2018, when the US Department of Commerce recommended a wide range of tariffs on aluminum and steel imports, major US steel stocks (SLX) Nucor (NUE), AK Steel (AKS), and Cleveland-Cliffs (CLF) gained 4.5%, 13.8%, and 7.6%, respectively, on that day.
The rise in the import duty on steel will likely help the US domestic steel market. US steel producers, who are mainly focusing on the domestic market, stand to benefit from this step. President Trump’s measure aims to provide support to US steel makers, who suffered heavy losses in past years due to fluctuation in commodity prices.
However, global trade might be hampered and various US manufacturers who largely depend on US steel producers may face some issues due to the expectation of a rise in steel prices. Similarly, the major trading partners of the US could impose various tariffs on US exports.
Major global ETFs such as the iShares MSCI ACWI ETF (ACWI) and the Vanguard Total World Stock ETF (VT), which track the performance of the global markets, fell 1.2% and 1.1%, respectively, on March 1, 2018.
In the next part of this series, we’ll analyze how the tariffs will affect China’s economy.