[Text/Observer Network Chen Sijia] Last week, when U.S. President Trump visited a factory of United States Steel Corporation in Pennsylvania, he announced that he would increase the tariff on imported steel from 25% to 50% to protect the U.S. steel industry "from foreign and unfair competition."

"The United States is lowering a new 'steel curtain' (Steel Curtain)." The Wall Street Journal reported on June 1st that Trump's tariff barriers will raise steel prices, which may help U.S. steel manufacturers curb deficits. However, this measure is unlikely to save or create jobs, and it will also increase the costs for companies such as automobile manufacturers and machinery manufacturers, potentially damaging these businesses and leading to a decrease in steel demand.

Trump announced the tariff hike during a rally near Pittsburgh, which was aimed at promoting a $14 billion deal between Nippon Steel Corporation and U.S. Steel Corporation. He claimed: "There has never been a $14 billion investment in the history of the U.S. steel industry. Most importantly, U.S. Steel Corporation will continue to be under American control."

Last week, Trump changed his stance on the Nippon Steel acquisition case. On May 23rd, he posted on social media that Nippon Steel would "reach an agreement" with U.S. Steel Corporation. He boasted that this cooperation would create at least 70,000 jobs, with Nippon Steel committing to invest $14 billion in U.S. Steel Corporation, including a $2.2 billion investment in a factory in Pittsburgh.

On May 30th, Trump held a rally in Pittsburgh, Pennsylvania, video screenshot.

In 2023, Nippon Steel planned to acquire U.S. Steel Corporation for approximately $14.9 billion, but the acquisition encountered political resistance. Former U.S. President Biden blocked the deal on the grounds of "suspected impact on U.S. national security." The Wall Street Journal pointed out that Biden made this decision to create opportunities for the acquisition plan of Cleveland-Cliffs Inc.

Cleveland-Cliffs CEO Lourenco Goncalves and David McCall, president of the United Steelworkers Union, wanted to create a steel cartel with more leverage to raise steel prices.

The report stated that if Cleveland-Cliffs successfully acquires U.S. Steel Corporation, it will control 100% of the blast furnace production, iron ore reserves, electrical steel production, and two-thirds of the automotive steel production in the United States.

However, Republicans persuaded Trump to approve the higher bid from Nippon Steel, and this deal received support from steelworkers. Last month, Cleveland-Cliffs announced plans to lay off 1,000 workers, shut down factories in Pennsylvania and Illinois, and abandon plans to build a new factory in West Virginia to reduce financial losses and repay debts.

The Wall Street Journal believes that Trump's decision to raise the steel tariff to 50% is a "consolation prize" awarded to McCall, who opposed the Nippon Steel acquisition case. Higher tariff barriers may help Cleveland-Cliffs curb deficits.

However, the article points out that Trump's new "steel curtain" is unlikely to save or create jobs, but instead will increase costs for steel users such as automobile manufacturers and machinery manufacturers, potentially having counterproductive effects.

Braddock, Pennsylvania, Mon Valley Works of United States Steel Corporation, Visual China

During his first term, Trump also imposed tariffs on steel and aluminum. This move caused steel and aluminum prices to rise for a period of time, but it harmed customers and ultimately led to a decrease in demand. A study by the Federal Reserve estimated that the tariffs resulted in the loss of 75,000 manufacturing jobs in the U.S., with the number of metal products manufacturing jobs decreasing by about 33,000 compared to when the tariffs took effect.

Goncalves said in a recent quarterly earnings conference call that Trump's auto and steel tariffs on Canada have affected some customers of Cleveland-Cliffs who sell products in the U.S. "This was not part of our plan, absolutely not, and no one anticipated this happening."

Goncalves also added that if he had known that the Trump administration "would not treat Canada like a friend," he would not have acquired Stelco, the Canadian steel manufacturer.

Previously, Trump posted on social media that the new steel tariffs are expected to take effect locally on June 4th. This move has already drawn widespread dissatisfaction. Marty Warren, director of the Canadian division of the United Steelworkers Union, bluntly stated: "This is not trade policy; it is a direct attack on Canadian industries and workers."

Dominic LeBlanc, Canada's Minister of International Trade, stated that Canada will "firmly" protect its own workers and communities. He posted on social platform X, stating: "As we negotiate a new economic and security relationship with the United States, the Canadian government will take a firm stance to secure the best possible outcomes for Canadians."

The European Commission spokesperson said that the EU is prepared to implement retaliatory measures. The spokesperson stated in a declaration: "We deeply regret the U.S. announcement of increasing the steel import tariff from 25% to 50%. This decision further increases global economic uncertainty and raises costs for consumers and businesses on both sides of the Atlantic."

The declaration stated that the tariff increase also disrupts ongoing negotiations between the U.S. and the EU. "In good faith, the EU suspended retaliatory measures on April 14th to create space for continued negotiations. The EU is prepared to take retaliatory measures, including responding to the U.S.' recent tariff hikes."

This article is an exclusive contribution by Observer Network and cannot be reprinted without permission.

Original text: https://www.toutiao.com/article/7511307840397640228/

Disclaimer: The views expressed in this article are solely those of the author. You can express your attitude by clicking the "Like/Dislike" buttons below.