Implications of Imposing Tariffs on Steel and Aluminum: A Discussion on Liberal and Statist Arguments

Running head: INTERNATIONAL POLITICAL RISK
International political risk
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1INTERNATIONAL POLITICAL RISK
Introduction
In the recent time, one of the major news currently in air is the increase in the import of
steel aluminum tariffs by 25 percent and 10 percent respectively. It is one of the major steps
being taken by Donald Trump in the recent time1. According to him, the increase in the import
tariff of the steel and aluminum would help the domestic steel producers to gain competitive
edge over the lower cost of the imported steels. Moreover, Donald Trump also stated that, this
policy is in accordance to the fair trade rather than just following the free trade, which further
amplified the debate between the free trade and fair trade2. However, there are various authors
who have given views in support or against the step being taken. In addition, this step will have a
few positive as well as negative implications on the American political economy as well as in the
global economy.
This essay will discuss about the statist and liberal arguments being given by different
authors regarding the increase in the steel and aluminum tariffs. Thus, it will help to decide
whether the step taken will have more positive impact or vice versa.
Liberal arguments
Liberal arguments are more inclined towards market and free economy. As stated by
some authors3, there are obviously some differences between the free trade and fair trade. This is
due to the reason that, free trade refers to the extensive liberalization of the market and
delegating the economical factors entirely on the market elements. Thus, government and other
regulatory authorities are not having any responsibilities in the economy. On the other hand, fair
1 "Forbes Welcome." Forbes.com. N.p., 2018. Web. 7 Mar. 2018.
2 Bown, Chad P. "How different are safeguards from antidumping? Evidence from US trade policies toward
steel." Review of industrial organization 42.4 (2013): 449-481.
3 Frieden, Jeffry A. Global capitalism: Its fall and rise in the twentieth century. WW Norton & Company, 2007.

2INTERNATIONAL POLITICAL RISK
trade is the providence of equal opportunities to all the involved parties in the trading. Thus,
according to the authors, the key objective of initiation of free and market economy is to provide
opportunities to all. However, in the case of the steel and aluminum market in the United States,
equal opportunities are not being promoted. This is due to the fact that, the domestic production
of the steel in the United States cost higher compared to the imported ones4. This is having dual
demerits with one being the reduction in the profitability and market opportunity for the
domestic producers and the other one being inflow of the inferior quality materials. Therefore, it
can be concluded that though government should not have any role in the free economy but it
should promote fair deal for the involved parties. In addition, it is also the responsibility of the
government to safeguard the interest of the domestic industry even exposing them to the global
competition.
According to some other authors5, global political economy is one of the key factors to be
considered by the government in the recent time. Moreover, in the case of the United States,
political economy is not so favorable with the rapid rise of the economies such as China and
Russia. Therefore, in the free economy also, government should have some sort of regulation in
order to check the possibility of dumping in the domestic market by the foreign companies.
Moreover, in the case of the United States, there are various instances where it is being seen that,
inferior quality of goods are being exported.
All these arguments prove that the decision of imposing trade tariffs on steel and
aluminum is right from different point of view even if it is being judged from the liberal point of
view. The issue is more justified due to the reason that, the various export items of the United
4 Caruso, Eugene M., et al. "Mere exposure to money increases endorsement of free-market systems and social
inequality." Journal of Experimental Psychology: General142.2 (2013): 301.
5 Irwin, Douglas A. Free trade under fire. Princeton University Press, 2015.