Having raised import duties on steel and aluminum, US President Trump has buried the WTO and declared a commercial war on the whole world. "We are observers here, and this is going to be an interesting show to see," Vladimir Rozhankovsky, leading analyst at Horizon told Pravda.Ru.
"Donald Trump announced the introduction of import duties on steel and aluminum. Bloomberg wrote that this would be a gift for the OPEC and Russia, because the US will not be able to build gas and oil pipelines at the expense of American producers. They will be forced to purchase pipe steel at higher prices, shifting its cost on the cost of hydrocarbons. Do you think this is "bad news for the resurgent US shale industry?"
"First of all, the decision will raise prices on products of such American industries as car making, aircraft making, the construction of housing and offices. As for the oil and gas industry, if there are imported pipes used there, the cost of production will obviously grow. If they make steel more expensive, cars will be more expensive too, the demand in cars will decline, and they will be less competitive globally. In a nutshell, it will be more and more difficult to export American goods. From my point of view, Trump is doing inefficient work when he raises tariffs."
"How will steel and aluminum exporters react? What will happen to the steel industry of the allies - Canada, Europe and Japan?"
"They have many merry days ahead of them. Canada has already expressed a protest in connection with the duties. NAFTA (the free trade zone of the USA - Mexico - Canada) practically does not exist anymore. Canada will be affected most, because its economy is complimentary to the US economy. The Canadian economy may experience a serious setback, because more than 50 percent of Canada's budget revenues come from exports of raw materials and products of primary redistribution of raw materials."
"Why doesn't the World Trade Organisation react to the issue?"
"I think the WTO is dead. On Saturday, March 3rd, Trump said that he did not want to see so many European cars on the US market. This was a declaration of the trade war. Within the WTO, Europeans will meet without the US on a neutral territory. All this does not affect Russia, because Russia lives under plenty of sanctions. Russia remains as an observer here, we can just wait and see what happens in this show."
"On March 2, Swedish company Electrolux announced the suspension of plans to invest $250 million in the modernisation of one of its factories in the US and in the development of new products. Is it critical for the US?"
"Of course. Two months ago, Trump said that he would pay special attention to the production of washing machines. US-based brand Whirlpool has been ousted from the market by other brands, including Electrolux, during ten years. Earlier, when traveling around the States, I could see at least three Whirlpool devices in people's homes - a refrigerator, a dishwasher and a washing machine in every house. During the last ten years, the Americans have opted for Samsung fridges and so on."
"Why is it happening?"
"Because Whirlpool was not offering innovations. Whirlpool did not have two-door fridge models, no models with darkened glass panel, no self-cleaning functions, no scent absorbers, no function of greenhouse atmosphere for vegetables and fruit. And Whirlpool fridges are not energy-saving. The preferences of the American consumer are obvious."
"In the last 20 years, America has been engaged in its financial sector, which was thrown off the pedestal in 2008. There was practically no competition in production. It was very painstaking for the Americans to reanimate the dying General Motors. Airbus sells twice as many aircraft as Boeing.
"I think that until the Americans weaken the dollar and abolish anachronistic laws, such as the law on the minimum hourly salary, chances for improvement are not so great. The dollar is comfortable on the index from 75 to 80 (USDX - the index showing the ratio of the US dollar to the basket of six major currencies - Ed.). They need a smaller number if they want to give an incentive to exports of American goods. The current level is 90. With such an expensive dollar, the American industry automatically becomes the most expensive production in the world.
"The minimum hourly wage is another obstacle. Many Americans are unemployed, and they would be willing to work for ten dollars an hour, especially young singles. Yet, they can not do it, because the federal law prescribes the minimum wage of $14.
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In a weary world of endless US military interventions, sanctions, trade tariffs and chaos, let’s pause and take stock of the shining house on the hill