During the U.S. Presidential campaign it was hard to miss candidate Trump’s constant threats against China and Canada. He wished to enact tariffs on some of America’s biggest trading partners. Along with his legions of supporters, Trump felt that America gets the worst of the deal on most every trading arrangement the country has made over the last forty years.
Now the time has arrived when he may finally make good on those constant threats. Though the President has not formally decided whether or not he will put the punitive tariffs on steel imports which he has been contemplating for some time, Axios has just reported that the President is seriously inclined to impose new tariffs of 20 percent.
Helping to push forward the issue is Secretary of Commerce Wilbur Ross. He desires to conclude a rapid probe of the threats that steel (made in other nations) poses to U.S. security under the authority of the Trade Expansion Act, Section 232.
The real very potential of erecting tariff barriers on steel imports has ignited fear of starting trade retaliations with a few of America’s most important and closest allies. It is these countries that actually deliver the majority of American steel imports, and not really China, as the graph below clearly demonstrates:
In point of fact, nearly half of all U.S. steel imports come form stalwart American allies Canada, South Korea, Brazil, Mexico, and Japan. Chinese steel accounts for under four percent of total U.S. steel imports. This means even Taiwan supplies more steel to America than does Taiwanese arch-rival mainland China.
Besides raising the prices on American steel users and causing them to be less competitive on a global scale, it threatens trade retaliation that breaks out potentially into a widespread tariff and trade war among some of the greatest trading nations on earth, such as the U.S., Canada, Brazil, South Korea, and Japan.
U.S. steel prices are already 55 percent higher last year alone thanks to a range of trade lawsuits that led to duties for anti-dumping measures on steel in America. Longbow Research Senior Analyst Christopher Olin warned:
“Retaliation is one of the risks to this whole story. You’re going to raise the price of steel” and this increases the global pressure on the significant steel buyers of North America.
Yet Commerce Secretary Wilbur Ross was complaining just this past Friday morning about various steel imports. He accused China Friday of continuously dumping its steel so that it makes its way into the United States from other national markets.
The administration’s principal argument remains that the threat to U.S. economic and national security is real. Canadian Prime Minister Justin Trudeau opined this past week the notion that long time trusted defense, trading, and NATO partner Canada represents any form of threat to American security is just “silly.”
China’s argument against the tariffs’ threat centers on its steel shipments to the United States being only lower-end products which American companies do not even produce. Chinese higher quality steel imports to America were already devastated by the duties which the U.S. imposed over the last few years.
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You can be sure that Canada, China, South Korea, Mexico, Brazil, and Japan are not going to take the steel import tariffs without reprisals. White House Economic Adviser Gary Cohn’s recent declaration,”Let us be clear: We will act to ensure a level playing field for all” is no laughing matter. Trump’s Hamburg meeting of the G20 next week in Germany is unlikely to shift his position on his promised restoration of the rust belt economy and jobs.
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