The United States could have potentially started a trade war when it imposed heavy tariffs on the importation of steel and aluminum. Steel imports are set to carry a 25% tariff while aluminum imports would carry 10%. The move created economic changes in the stock markets and retaliation on countries that the imports affected. The United States is the largest importer of steel in the world. It has increasingly imported steel more than it has exported in the previous years. To reduce importation, the US imposed trade tariffs on the importation of steel. The trade tariffs could have dire consequences by affecting the political and economic relations with the countries affected. This paper discusses the effect of trade tariffs on steel on the political and economic relationship with the three top importers of steel to the USA: China, Germany and South Korea and the effect on the hospitality industry from a supplier standpoint and from a customer standpoint.
Trade tariffs imposed on steel were mainly targeted towards China. China was mentioned in broad terms when talking of the plans to impose tariffs on steel imports. China makes a large amount of steel and floods the global market with cheap products. The trade tariffs would hardly affect China’s economy. This is because China is a large steelmaker and sends only a tiny fraction of its output to the United States. China accounts for only 2 percent of its exports to the United States. Most of China’s steel markets are the Asian markets. On the flipside, China noted that the tariffs could have an impact on the U.S. industries making them fall further behind at a time when China’s economy is at its prime.
Delegate your assignment to our experts and they will do the rest.
The political relationship between China and the United States has been severely affected by the imposed tariffs. China reacted with criticism to the plan to impose tariffs on the importation of steel. It urged that the United States should abide by multilateral trade rules. The country insisted that the country should do nothing to damage the fragile recovery of the global economy. According to the Chinese Foreign Ministry, all countries with steel industries are facing difficulties. The imposed tariffs is thus a bad a move on the global economy. It urged that the United States should use restraint from using extreme protective measures but should make a contribution to the international trade.
The steel tariffs are likely to affect German’s economy in a more significant and negative way. Germany exports more Steel to the United States compared to any other country in the European Union. It accounted for about 3 percent of steel imports to the U.S. According to the country, the imposed trade tariffs could lead to the declaration of a trade war. The announcement could thus trigger retaliation by the country.
The political and economic relationship between the European Union and the United States is set to be severely affected. Germany is under trade protection of the European Union. The trade tariffs place the entire EU at risk and the countries found them unfair as it puts thousands of jobs at risk. The EU has been proposing that it would add countermeasures in the coming years. One example of a countermeasure could include putting tariffs on various imports from the United States. The European Union has been considering a retaliation by placing import duties on United States imports that could amount to $3.5 billion. Placing such duties could be the onset of trade wars.
South Korea is also a major exporter of steel to the United States. However, compared to China, South Korea exports to the United States are about one quarter. With the trade tariffs, South Korea plans to take its complaints to the World Trade Organization to arbitrate international trade disputes. If the World Trade Organization sided with South Korea, the US would be under high pressure to back down its trade tariffs. A trade fight could be painful to South Korea as it exports a lot more to the United States than that which they import. Higher tariffs could thus hit South Korea’s economy harder. The effects have already been felt after steelmakers companies in South Korea saw a drop by 3 percent of their stock prices. The end result is that the domestic markets would be flooded with steel products that have no other place to go.
Trade tariffs could have a positive impact on some industries and a negative impact on other industries in the United States. Steel manufacturing industries see the move as beneficial as it would bring back tons of productions from their companies. The companies expect to hire more people as they expect more profits in the companies. The community is set to benefit from the creation of more jobs. However, many car manufacturing industries are set to experience a negative effect on their business. The tariffs could see an increase in the cost of steel and thus the cost to build trucks and vehicles in the United States. This could result in higher car prices leading to reduced sales.
Effect on Hospitality Industry
The hospitality industry plays an important role in the development of any country. Expansion of the hospitality industry leads to benefits for businesses such as hotels, resorts, restaurants, and travel agencies. These businesses attract foreign money and generate income that is distributed throughout the country. The degree of international trade can have an impact on the international hospitality industry. The imposed tariffs on steel can impact international relations negatively and have an overall negative effect on the hospitality industry.
From a customer standpoint, the imposed tariffs will reduce business travels. Customers in the hospitality industry include people going on business trips. The tariffs will reduce international trade and provide few opportunities for business travels. Since business travel is one of the reasons for international tourists, imposing the tariffs will reduce international tourists. International tourists make up a percentage of customers to the hospitality industry. The imposed tariffs have further created a negative backlash from the international community. This can create a negative attitude towards the United States by these countries. The overall effect is an overall resentment and reduced international tourists.
The imposed tariffs will make suppliers of the hospitality industry face a negative growth in their businesses. The hospitality industry suppliers include restaurants, travel companies, hotels, and resorts. The trade tariffs will reduce international trade and create a reduction in international tourists. The overall impact is that suppliers in the hospitality business will face a negative growth.
While the steel trade tariffs could be beneficial to the United States, it is highly disadvantageous to international relations, international trade, and the hospitality industry. The move may see the onset of trade wars and create losers only. International players will lose because they will find it difficult to export their steel to the United States. It could also result in a domino effect when other countries impose tariffs so as to protect themselves. The hospitality industry will face a negative growth in terms of customers and the over suppliers will experience a negative business growth.
