President Trump announced tariffs on imported steel and aluminum earlier this month. Though he initially said these tariffs would include "no exemptions," he has now reportedly given temporary exclusion to imports from Canada and Mexico.
The time-sensitive exemptions on both countries are a result of a greater leverage for a modification of the current global trade agreements under NAFTA. The White House has also said that it will give opportunities for other nations to argue for "satisfactory alternative means" that will allow them to avoid the new tariff. Despite the pushback of multiple countries and congressmen, including 107 Republican House members who signed a letter against the tariffs, the tariffs will take effect in 15 to 30 days. The tariff, a strategy which the White House asserts are important for economic and domestic security, will implement a 25 percent and 10 percent charge on steel and aluminum, respectively.
President Trump offered Canada and Mexico exemption from the tariff only on the condition that they make certain concessions in a new NAFTA agreement. Both countries have declined, with Canadian Prime Minister Justin Trudeau calling the new tariffs "absolutely unacceptable." Many others have also openly opposed the tariffs, with President of the U.S Chamber of Commerce Tom Donohue asserting that the tariffs "would directly harm American manufacturers, provoke widespread retaliation from our trading partners, and leave virtually untouched the true problem of Chinese steel and aluminum overcapacity."
Along with Canada and European countries, China has openly expressed their plan to respond and reciprocate actions against the tariff, actions that may lead to more global conflict. Trump recently tweeted a warning to China, stating "The U.S. is acting swiftly on Intellectual Property theft. We cannot allow this to happen as it has for many years!" The tweet was released amidst the Trump administration's push to address China's practices of convincing foreign companies to relinquish confidential trade strategies to gain better access to China's economy in return. Recently, the White House has launched an investigation, conducted by U.S. trade representative Robert E. Lighthizer, into China's intellectual property policies, which may include codes that potentially treat U.S. companies unfairly. Companies negatively affected by Chinese policies may be inclined to view the tariffs in a rosier light than most.
The Trump administration has framed the new tariff as a solution to global economic security for the U.S. As such, President Trump is using Section 232 of U.S. law, a code that allows a president to establish tariffs in the interest of national security. Given that steel and aluminum are necessary for the United States to create military products such as tanks and weapons, the Administration has argued that the 232 code fits the cause perfectly.
As a result of the tariff announcement, the stock market reportedly fell by 586 points. Nevertheless, the discouraging fall does not appear to indicate any danger - the Dow Jones industrial average fell less than 1 percent and has climbed to a higher level despite Trump's declaration of the new tariff.