After only a few days of calm, Trump started causing trouble again. Just before the deadline for the "tariff grace period," he imposed another round of tariffs, with only one country being lucky enough to be exempted. When outsiders thought that Trump's move was aimed at China, China turned out not to be the biggest victim.

Trump giving a speech at a steel factory

Recently, Trump signed an order to raise the import steel tariff from 25% to 50%, which will take effect on June 4th. The global trade map trembled instantly. Only the UK escaped due to its trade agreement with the US; no other countries were spared. However, when outsiders believed that Trump's move was intended to completely eliminate China, data showed that China was not the biggest victim.

The real area affected by Trump's action is in his own backyard. Canada, Mexico, and the EU are suffering from a tariff nuclear explosion, and the US itself cannot escape retaliation. Although China is the world's largest steel exporter, the latest data shows that China is not among the top five steel importers in the US.

Carney inspecting the factory

Canada tops the list of aluminum exports to the US, followed by Brazil, Mexico, Germany, and other countries. Therefore, the first to bear the brunt of Trump's tax increase is Canada. The 15 billion CAD Canadian steel industry hangs on the edge of US policy. This move will cause a shock in the steel industry.

It is worth noting that the US itself cannot escape either. The US and Canadian automotive and machinery industries are highly integrated. Imposing high tariffs on Canadian steel is equivalent to closing the US market, and production shutdowns may occur on both sides of the border. Despite Carney's firm commitment to retaliate against the US, the reality is that Canada, due to its economy's heavy reliance on the US, cannot sustainably maintain opposition to the US.

Von der Leyen and Vance

If we talk about another severely affected party, it would be the EU. The US market absorbs 20% of Europe's steel exports. For the EU, especially industrial countries like Germany, Trump's tariff increase will make the already sluggish European economy even worse. The EU has been wavering between compromise and retaliation and has yet to establish a clear policy direction.

Trump's intention is to protect domestic steel production. During his speech at the steel factory, he promised the workers that there would be no layoffs, no outsourcing, and that each steelworker would receive a bonus worth over $30,000. Trump's ideal scenario is based on the premise that manufacturing returns to the US and American steel factories can make profits.

However, the reality is that this could lead to the collapse of downstream industries. Companies relying on imported steel face skyrocketing costs. Even if these companies use domestically produced steel, the cost of labor and facilities makes domestic steel far more expensive than overseas. This results in overall price increases. Companies might still manage to survive, but ultimately, consumers will foot the bill.

A steel plant in China

As for China, if it were in the past, Trump's actions might have severely impacted China. But now, China has avoided direct impact through two "buffer pads." On one hand, China's steel exports to the US account for only 890,000 tons, less than one percent of total exports. On the other hand, China actively explores other markets, such as ASEAN and the Middle East, accelerating the sale of excess capacity.

Of course, Trump's move may cause global steel and aluminum overcapacity to return, squeezing China's steel exports. Ultimately, however, the impact on China is indirect and far less severe than that on the US's close allies. The tariff storm will eventually pass. Although Trump's tariff walls may be effective in the short term, they are not a long-term solution. In the end, it will be the US itself that cleans up the mess.

Original article: https://www.toutiao.com/article/7511983890106434088/

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