U.S. Tariff Bill may Escalate to Whooping USD 3.5 Billion amid Potential Retaliation by Six Major Countries

The U.S. government’s announcement of tariffs on steel and aluminum imports in the month of Mar’18 have severely strained the relations between U.S. and world’s major economies. While India, China, and EU (European Union) have filed an official complaint with WTO (World Trade Organisation) against Trump’s tariffs, Japan, Russia, and Turkey have warned U.S. about potential retaliation.

All the six countries have submitted detailed compensation claims in notifications to the world trade body. Each showed how much the disputed U.S. tariffs would add to the cost of steel and aluminum exports to the U.S., based on 2017 trade figures.

While Russia has disclosed that Trump’s tariffs would add to duties worth USD 538 billion to its annual aluminum and steel exports, Japan has put the same sum at USD 440 million and Turkey added a further USD 267 million. China, EU (28 nations) and India have put their claims at USD 612 million, USD 1.6 billion and USD 165 million respectively, thus summing up the total U.S. tariff bill of around USD 3.5 billion annually.

When does WTO allow retaliatory tariffs?

A country using ‘safeguards’ – trade restrictions that can be legitimately used to protect a struggling industry from an unseen surge in imports is required to compensate other WTO members who stand to lose out from the restriction on their trade, normally by rebalancing their trading relationship with a net increase in imports of other goods.

However, United States denies that its tariffs are ‘safeguards’ and has offered no compensation, prompting the retaliatory action by above-mentioned nations.
As per the market reports, WTO has favored the retaliating countries because based on the past records it has been found that U.S. steel and aluminum sectors were not facing an absolute increase in imports and thus world body has permitted retaliation by countries in just 30 days times.

While Japan is free to impose USD 264 million of its retaliation after 30 days, Russia and Japan have not specified how they might retaliate against U.S. exports. However, Turkey has listed 22 U.S. goods that it is planning to target, ranging from nuts, rice, and tobacco to cars and steel products.