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U.S. Steel Tariffs: Economic Impact Analysis

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32 views5 pages

U.S. Steel Tariffs: Economic Impact Analysis

Uploaded by

Adeyemi Adesina
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Adeyemi Adesina

INT 220 Global Dimensions in Business

Module Three Journal

September 21, 2025

Introductory background
The United States is the world's largest economy, with the highest GDP and a diverse range of

industries, such as technology, finance, healthcare, and manufacturing. However, the country

faces inflation, fiscal issues, political divisions, social and income inequality, unemployment, and

rising healthcare costs.

Over many decades, the United States has negotiated and signed over 14 comprehensive free

trade agreements with more than 20 countries, especially with key trading partners like Canada

and Mexico. The U.S. has used this framework to address trade and investment issues affecting

its economy. However, since the time of the Founding Fathers, the U.S. economy has

experienced several government interventions in trade. One notable example is the U.S.

government's use of tariffs on steel imports.

It wasn't until 2018 that President Trump imposed a 25 percent tariff on imported steel, later

raising it to 50 percent during his presidency. These tariffs aimed to address national security

concerns and protect American steel producers from China, which was accused of dumping

cheap steel into the U.S. market.

Reasons for the US Government's intervention in tariffs on the steel industry.


 There are several reasons explaining this:
 To shield the domestic steel industry from foreign competition.
 To promote the use of domestically produced steel.
 To create jobs in the steel industry.
 To deal with the trade deficit with China

Impacted Parties and Organizations affected by the government


intervention
The tariffs had a significant impact on various stakeholders, including domestic steel producers,

aluminum manufacturers, foreign exporters, and consumers. The well-known US steel company

believes that imposing trade tariffs on countries like China will benefit it by reducing

competition from foreign producers. This could lead to increased production and potential job

growth by making imported steel more expensive. Additionally, most automakers and

construction firms face higher costs due to increased steel prices, which could potentially result

in higher prices for consumers of goods that use steel, such as cars and appliances.

Analysis of the impact on commodity prices:

The higher cost of imported steel might make the steel market less attractive, potentially

resulting in higher prices for consumers and businesses that rely on steel.

Business Implications

Identify key information

Businesses in the affected industry need specific details to adapt.

 Businesses need to understand the new costs of importing materials or exporting products

caused by the intervention.

 Information on global trade flows, potential supply chain disruptions, and alternative

suppliers is crucial.

 Businesses need to understand how commodity prices are shifting and how this impacts

their products and competitors.

 The specific details of the tariffs, including the rate and the types of steel affected, and

the potential for retaliation from other countries, which could lead to tariffs on U.S.

exports.
 The potential for policy changes, especially in response to shifts in the political climate or

legal challenges.

 The effect of tariffs on input costs, product prices, and the possibility of higher demand

for domestically made steel.


References

Cerruti, E., Gopinath, G., & Mohammad, A. (2019, May 23). The impact of US-China Trade
Tensions. IMF. Retrieved March 16, 2023, from
[Link] tensions

Harrison, V. (2019, July 31). US-China trade war: 'we're all paying for this'. BBC News.
Retrieved March 16, 2023, from [Link]

Palumbo, D., & Nicolaci da Costa, A. (2019, May 10). Trade war: US-China Trade Battle in
charts. BBC News. Retrieved March 16, 2023, from [Link]
48196495

Uzialko, A. (2023, February 21). How to prepare to manage tariffs for your business. Business
News Daily. Retrieved March 16, 2023, from [Link] small-
[Link]

Common questions

Powered by AI

The long-term economic consequences could include higher prices for steel-dependent goods, potential trade retaliation affecting US exports, disrupted global trade flows, and potentially strained relations with trading partners. Domestically, there might be increased demand for locally produced steel, but at the cost of increased consumer prices .

Pros of using tariffs include protection for domestic industries and potential job creation. Cons include higher consumer prices, potential retaliatory actions by other countries, and the risk of trade wars that can disrupt global markets and harm international relations .

International businesses might diversify their markets to reduce dependency on US sales, build resilience through supply chain partnerships, explore alternative shipping routes or suppliers, and advocate for diplomatic negotiations to resolve trade tensions .

Fluctuating trade policies can lead to uncertainty in supply chains, requiring businesses to assess risks associated with potential disruptions, adjust sourcing strategies, and consider the costs and benefits of relocating production to mitigate tariff impacts .

The US steel tariffs could reduce the attractiveness of the US market for foreign producers, influence global steel prices, potentially lead to retaliatory tariffs from affected countries, and strain international relations particularly with major steel exporters like China .

The US government justified steel tariffs on national security grounds by arguing that reliance on foreign steel compromises the security of essential infrastructure and defense capabilities that require a steady, reliable supply of domestically produced steel .

The effectiveness of tariffs in reducing trade deficits depends on factors such as the elasticity of demand for imports, the presence of alternative domestic suppliers, potential foreign retaliation, and the broader geopolitical context, which can influence trade dynamics and overall economic stability .

The tariffs benefited domestic steel producers by reducing competition from foreign producers, potentially leading to increased production and job growth. However, it raised costs for automakers and construction firms due to higher steel prices, which likely resulted in higher prices for consumers of products like cars and appliances .

The US government imposed tariffs on steel imports primarily to protect the domestic steel industry from foreign competition, promote the use of domestically produced steel, create jobs in the steel industry, and address the trade deficit with China .

Businesses can adapt by understanding new import and export costs, exploring alternative suppliers, monitoring changes in commodity prices, and preparing for potential policy changes or legal challenges in response to the tariffs .

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