The Trump administration has been at the helm of a number of controversial steps ever since it came to power. But as they announced substantial import tariffs on steel and aluminum imports on March 1st, the world was taken by surprise. Here we round up the impacts that have been noticed since the announcement and how things are shaping up for the future.
What are the tariffs?
A tariff is essentially a tax on imports that a certain nation can impose to allow its local players to grow their share in the market. President Donald Trump had promised to revive the steel and aluminum industry during his election campaigns. And keeping true to his words, he recently announced 25% and 10% import duties on steel and aluminum respectively.
The Recent Developments
The United States is one of the largest importers of steel in the world and the President issued proclamations late March for his tariffs to take effect. With US allies as well as local industries like the automotive manufacturing sectors concerned about rising costs, Trump announced an exemption for certain countries from the taxes in order to hold further negotiations with them on the matter.
Should China be worried?
While there have been speculations that the tariffs are directly targeted at China, which is one of the largest manufacturers and exporters of steel, the reality is quite different. China produced more than half of the world’s total steel output of 1.63 billion tons however, the country doesn’t feature anywhere in the list of the top ten countries that the US imports its steel from. In fact Chinese exports only amount to 0.2% of all US imports. This translates to just 0.01% of the Chinese GDP and despite that percentage being worth around $11 trillion, experts believe that the country can absorb this negligible impact quite easily.
Impacts on Chinese Stock Markets
The Hong Kong and Chinese Stock Markets fell between 2.2 and 0.59 percent following the tariff announcements by President Trump. However, this was not the only fall that was witnessed in the international arena. The prospects of a full blown trade war caused global markets to shed considerable shares. Furthermore, as China retaliated by announcing restrictions on its imports from the US, stock exchanges around the world especially the US index witnessed drops between 1.9 and 3 percent in the Dow Jones and New York Stock Exchanges respectively.
Although, things are cooling down and investor confidence is returning, what the future holds for China-Us trade relations is yet to be seen. For now, China is believed to have nothing to worry about in terms of impacts on its economy as well as stock markets.
Write something about yourself. No need to be fancy, just an overview.