Martijn Schippers interprets Trump's new import tariffs and global protectionism

The latest development is Trump's announcement on 10 February to impose 25% additional import duties on steel and aluminium imported into the United States. According to Schippers, this measure will have far-reaching consequences for Americans themselves in particular, he told listeners on NPO Radio 1: "This means that when these products are imported into the United States, they become relatively more expensive because additional levies are imposed at the border." He also noted that this is just one of the measures in addition to levies already announced and then paused from Canada and Mexico: "But what Trump also said was that he wants to impose additional levies on other products. He wants to do that if other countries will tax US products.’

Impact on businesses and consumers

The announced measures on steel and aluminium could have a major impact on both US companies and foreign producers. Schippers points to the adverse effects on companies like Tata Steel that supply the United States from various parts of the world and US automakers that rely in part on foreign steel and aluminium. "Many US companies will not benefit. Think, for example, of car makers that need steel from outside the US. Those face higher costs and will potentially pass it on."

US consumers in particular will end up paying the price for this, according to the associate professor: "US companies that import goods can pass those import duties on to someone. And they will: to US citizens."

Protectionism: a global trend

According to Schippers, the trend of protectionism started before Donald Trump's comeback on the political scene. Speaking to the Financieele Dagblad, Schippers said the following: "For instance, the United States has been obstructing the appointment of new judges at the World Trade Organization (WTO) Appellate Body for some time. As a result, no binding rulings on trade disputes are possible. Biden has not changed on this front. Washington felt that the WTO never sided with the US. So the fault lines were there before."

Not only the United States, but also the European Union has not shied away from protectionism in recent years. "In 2022, the Union introduced as many as 949 new non-tariff measures, substantially more than the US did at the time. The continent's rising protectionism can be traced in part to the corona crisis."

Green protection at Europe’s border

In addition to classic trade measures, Schippers tells the Financieele Dagblad, the EU is also pursuing another form of protectionism: "With all kinds of European sustainability regulations that countries outside the EU also have to comply with, such as a directive to combat deforestation and the CO2 border tax (CBAM). Brussels is making the world a better place with these, the thinking goes. But many countries simply perceive it as tariff walls on the European border and accuse the EU of protectionism with a green slant. With some cynicism, you could say the EU is packaging protectionism better."

Schippers explains the difference between US and European measures: "US state aid, such as the Chips Act and the IRA, is protectionist but does not block US market access. That is a difference with both CBAM and the deforestation directive. When certain information is not available, these goods are barred from the EU market. Although these standards also apply to sales within the EU, these measures lead to trade restrictions more quickly and are, in my opinion, more protectionist in nature."

Threats as a negotiation tool

Exactly what Trump's plans will entail remains uncertain. Schippers sees a familiar strategy he recently informed NOS Nieuws: "You see that he wants to threaten tariffs for extra revenue at the border, but often there is another purpose behind it. Trump also uses this kind of threat as a tool to force other concessions." He refers to Trump's first term when Europe responded with levies on typically American products such as jeans and whisky. "Later, the mutual levies were reduced again", Schippers notes.