By Payman Yazdani

Prof. Zonis: Trump’s tariff policy global effect to be less than expected

April 9, 2018

TEHRAN - Professor Marvin Zonis believes that due to many tariff exceptions to be offered to other countries by Trump administration the overall effect of his decision on global economy will be less than expected.

The United States President Donald Trump's decision to impose stiff tariffs on steel and aluminum imports opened up another debate among politicians and experts.
The U.S. will institute tariffs of 25 percent and 10 percent on imports of steel and aluminum, respectively, as early as next week, Trump said. It will apply the tariffs broadly, without targeting specific countries, and will not impose quotas.
Trump argues the tariffs will help the US industries and workers "destroyed" by unfair trade practices. He told steel and aluminum executives that their industries will have "protection for the first time in a while."
Though Trump cast the move as a win for Americans, many experts warned of possible cost increases for consumers and manufacturers.
To shed more light on the issue we reached out to Marvin Zonis, Professor of international political economy and leadership in the University of Chicago.
Following is the full text of the interview with him:

Q: How will President Trump's decision to boost tariffs impact U.S. domestic steel and aluminum producers?

A: It will boost domestic production and increase domestic costs so a net loser for the entire U.S. economy.

Q: How will it actually impact the aluminum and steel industries globally then?

A: Many exceptions will be offered to other countries so the overall effect will be less than expected.

Q: Considering some of the beneficiaries behind his decision are there other internal or external beneficiaries in addition to the companies in America, or is it just American companies who are going to benefit from this decision?

A: Canadian and Mexican producers will benefit as they have already received exemptions.

Q: How much will this decision to increase tariffs affect countries like China, Japan and South Korea then?

A: South Korea has just agreed to lower tariffs on U.S. products, for example, on U.S. manufactured cars. In that sense, Trump’s “trade war” is receiving positive results from another country. The big issue is China. It is important to keep in mind that in China has been playing unfairly on so-called “free” trade for years — providing various hidden subsidies for their domestic producers, e.g. electricity costs, shipping costs, low cost credit, et, etc., while simultaneously excluding American made products form the China market all the while stealing technology. U.S. leaders figured that as long as those practices and concomitant high levels of economic growth were driving China towards a more liberal type of democracy, it was a price the U.S. was willing to pay. Now, under President Xi, it is clear the dream of a liberal China is over. It is time to stop allowing China’s trade war against the U.S. to go unanswered.

Q: How likely will the European Union retaliate by imposing tariffs on the U.S. products?

A: Only very delicately.

Q: Will Trump’s acts result in a trade war between the U.S. and world’s other economic powers? What can be the consequences of such a possible war for world?

A: I think there will less here than meets the eye — negotiations will be held, exceptions will be granted, things will calm down.

Q: After world war, the cooperation between the U.S. and Europe was based on trade, security and military regimes like NATO. Don’t you think possible trade war between the U.S. and Europe can spill over other security and military fields, too?

A: I think the dangers from President Trump’s likely cancellation if the Iran nuclear deal is a far greater challenge since the major U.S. allies plus Russia and China all support the deal.

Q: Rising of rightist in Europe is a threat to the future of the EU and from the other side this can result in more independent trade relation without the EU considerations. Considering this fact how do you see the future of EU?

A: The EU faces staggering challenges, most recently from the results of the Italian election, not to mention Hungary, Poland, and the Czech Republic. But there is just massive support for the EU among European elites and they will manage to keep it stumbling along.

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