A Summary of the Tariff Effects on the U.S. Economy

In an attempt to protect U.S. steel and aluminum industries from the competition with foreign producers, the U.S. government intends to impose new tariffs on the produce under consideration. To cut it short, the new tariffs will result in the lower U.S. GDP. However, the list of possible consequences can consist of a few other factors.

To begin, steel imports will be subject to a 25 percent duty, while aluminum imports – to that of 10 percent. Though these industries account for just about 0.20 percent of the total employment, they are closely connected and directly influence other important fields of the U.S. economy. For instance, the changed tariffs will affect the construction of bridges, erection of large commercial structures, as well as the production of automobiles and different kinds of equipment. Such a wide distribution of the steel and aluminum products will result in the fact that the GDP will decrease by 0.25 percent due to the new tariffs.

It should be mentioned separately that the World Trade Organization (WTO) has a firm position concerning the tariffs and their setting. To explain, the WTO fixes a base rate that may not be overcome by any member. In addition, the organization stipulates that no country may set dramatically different tariffs for two separate countries. Being a WTO member, the United States of America shall adhere to the rules.

To continue, numerous analysts state that the increased tariffs by themselves will not have a serious impact on the whole industry. The opposite situation can be found if we take a look at the possible retaliation from partner countries. Taking into account that the USA intend to increase the tariffs on the imported goods in order to develop their domestic economy, it is not a surprise that EU countries and China can initiate the same measures for the same purposes. Constant increases of the tariffs will lead to a trade war that, in its turn, will inevitably result in losses of GDPs for all the parties to it. From the industrial point of view, however, the possibility of the trade war is rather dangerous for the USA because China has become a serious player in the world aluminum market over the last several years. In case of the war, the USA will have to look for other exporters. In addition, we should not also forget about the influence exerted by other world countries on the U.S. economy.

To conclude, we can say that the higher tariffs will be more significant from the political point of view. If the situation keeps escalating, the world will be likely on the verge of the trade war.

Works Cited

Sposi, Michael, and Kelvinder Virdi. “Steeling the U.S. Economy for the Impacts of Tariffs.”Economic Letter, vol. 13, no. 5, Apr. 2018, pp. 2–4.

The terms offer and acceptance. (2016, May 17). Retrieved from

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"The terms offer and acceptance." freeessays.club, 17 May 2016.

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freeessays.club (2016) The terms offer and acceptance [Online].
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"The terms offer and acceptance." freeessays.club, 17 May 2016

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"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
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