“I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.” These are the words of the current president of the US, Donald Trump. During the election for president in 2016 he
made numerous protectionist election promises. One of his election promises was to create new jobs in the American industry. American companies should purchase on the domestic markets to strengthen the manufacturing sector and create jobs. Added to this is Trump's aversion to free trade agreements which makes him a supporter of tariffs.
These two points are in line with the development of US tariffs on imports. Looking at the steel and aluminum industry, the USA introduced Tariffs during the term of Donald Trump. The import tariff on aluminum currently equals 10 % and the tariff on steel
25 % of the goods value.
However, the US is as well one of the main responsible states in the creation of the General Agreement on Tariffs and Trade (GATT) which provides free trade and has been a contracting party of the trade agreement since 1948 which in other words means since the very first hour. The question in this context is to what extent tariffs and the GATT are compatible with each other and how it is possible for a contracting party to the GATT to levy tariffs at all. [...]
Table of Contents
1 Introduction
1.1 Problem Definition and Limitations of Research
1.2 Objective and Organization of Research
2 Definition of Basic Terminology
2.1 Definition of Trade
2.2 US Trade Policy and National Laws
2.3 Definition Trade Barriers with the Focus on Tariffs
3 World Trade Organisation
3.1 History of the World Trade Organisation
3.2 Structure of the World Trade Organisation
3.3 Principles of the World Trade Organisation
4 US Tariffs on Steel and Aluminum
4.1 General Facts about the US Tariffs on Steel and Aluminum
4.2 Microeconomic Effects of Imports and Tariffs on Supply and Demand
4.2.1 The Functioning of Supply and Demand
4.2.2 Effects of Import on Supply and Demand of Steel
4.2.3 Effects of Tariffs on Import on Supply and Demand of Steel
4.2.4 Evaluation of the Effects of Imports and Tariffs on Free Trading
4.3 Evaluation of the Conformity of Tariffs with the GATT
5 Conclusion
5.1 Summary
5.2 Critical Review and Outlook
Objectives and Core Topics
This paper examines the consistency of US steel and aluminum tariffs, implemented during the Donald Trump administration, with the international legal framework of the General Agreement on Tariffs and Trade (GATT). The research analyzes whether the justification for these measures—specifically citing national security—is legally and economically sound or if it serves as a protectionist tool to fulfill domestic political campaign promises.
- Analysis of the historical and structural framework of the World Trade Organization (WTO).
- Evaluation of microeconomic impacts of import tariffs on domestic supply and demand.
- Investigation into the legal justifications for tariffs under Section 232 of the US Trade Expansion Act.
- Critical review of the compatibility between national protectionist policies and international GATT commitments.
Excerpt from the Book
4.2.3 Effects of Tariffs on Import on Supply and Demand of Steel
To illustrate the effect of tariffs on imports, the effect is first explained theoretically and then using the concrete example of the USA. Figure 3 in the appendix 1 shows the theoretical effects of tariffs on the supply and demand. This is a simplified illustration in order to highlight the core effects. P1 shows the price with import and without tariffs and P2 shows the price with tariffs on import. As foreign companies earn P1 on each unit steel sold worldwide, they are only willing to export to the US, if they earn the same unit revenue in the US as well. To also earn the same revenue they increase the price to P2. As a reaction local firm increases the price to P2 as well, without having to pay tariffs.
The changes concerning the surplus before and after tariffs are shown in the table 2 of the appendix 2. The consumer surplus with import before introducing the tariffs equals areas A+B+D+E+F+G+H+I, while the producer surplus equals area C. The consumer surplus after the introduction the tariffs equals the areas A+D+G, whereas the producer surplus now includes the areas B+C+E. All in all the tariff leads to a welfare loss that equals the areas F+I. In addition, the state has a tariff revenue that equals the area H.
Summary of Chapters
1 Introduction: Introduces the political motivation behind US tariffs and defines the research question regarding their GATT compatibility.
2 Definition of Basic Terminology: Establishes the necessary economic and legal foundations, including trade definitions and the classification of trade barriers.
3 World Trade Organisation: Provides an overview of the history, organizational structure, and core principles of the WTO as the governing body for international trade.
4 US Tariffs on Steel and Aluminum: Analyzes the implementation of tariffs, their microeconomic consequences, and evaluates the national security justification against GATT regulations.
5 Conclusion: Synthesizes the findings, arguing that the tariffs are primarily protectionist rather than security-driven, and discusses the challenges of enforcement within the WTO.
Keywords
US Tariffs, Steel and Aluminum, GATT, WTO, International Trade, Protectionism, National Security, Section 232, Trade Expansion Act, Microeconomics, Supply and Demand, Trade Barriers, Import Duties, Economic Welfare, Global Trade System
Frequently Asked Questions
What is the primary focus of this seminar paper?
The paper examines whether the US steel and aluminum tariffs are compatible with the international trade rules set forth by the General Agreement on Tariffs and Trade (GATT).
What are the central themes discussed in the work?
The central themes include the mechanics of international trade, the legal framework of the WTO, the economic theory of supply and demand under tariff conditions, and the political motivations behind national trade policies.
What is the main research objective?
The objective is to determine if the justification of "national security" used by the US to implement tariffs holds up under scrutiny when compared to GATT exceptions.
Which scientific methods are applied in this study?
The study utilizes a descriptive research approach combined with microeconomic modeling (supply and demand curves) to analyze the welfare effects of import tariffs.
What content is covered in the main section of the paper?
The main section covers the history and principles of the WTO, a microeconomic analysis of how tariffs affect domestic markets, and a legal evaluation of US trade law relative to international agreements.
Which keywords best characterize this work?
Key terms include US Tariffs, WTO, GATT, National Security, Protectionism, and Microeconomic Effects.
How does the author evaluate the "national security" justification?
The author concludes that this justification is likely a pretext for fulfilling election promises to protect domestic industry rather than a genuine response to an actual security threat.
Why is the WTO unable to effectively intervene in this case?
The author notes that the WTO functions through member consensus and lacks strong enforcement or sanctioning powers, making it difficult to force a major power like the US to comply when it refuses.
- Arbeit zitieren
- Aristoteles Kourtidis (Autor:in), 2020, US Tariffs on Steel and Aluminum and their conformity with the GATT, München, GRIN Verlag, https://www.hausarbeiten.de/document/542900
