Doha: Steel and aluminum markets have recently witnessed significant fluctuations under the pressure of tariffs imposed by the US administration headed by Donald Trump, which have cast their shadow not only on producing countries, but also on consuming countries after their prices skyrocketed, leading to increased costs for companies that need raw materials.
According to Qatar News Agency, Dr. Omar Gharaibeh, PhD in investment risk management at Al Al-Bayt University in Jordan, highlighted that the US president's imposition of 25 percent customs duties on steel imports aims to protect local US industries from industrial dumping, especially from China, which is the largest steel producer in the world, with over 50 percent of global production.
Ghraibeh considered these measures a clear violation of global trade rules and that they will harm the global economy. These fees, which include US steel imports worth USD 50 billion, are expected to lead to market turmoil, given that the United States and China are the main drivers of the global economy. Such economic turmoil includes increased production costs, decreased investment volume, increased unemployment rates, the return of global inflationary pressures, disruption of supply chains, decreased growth rates in these countries, increased global economic slowdown, and escalating trade tensions between major economies.
Since China dominates more than 50 percent of global steel production, imposing US tariffs will reduce China's ability to export its products to US markets, leading to a surplus in Chinese production, a decrease in local prices in China due to increased supply, and a decline in the profit margins of manufacturers inside China, said Dr. Gharaibeh. He added, "This will force many Chinese factories to reduce their steel production, which will ultimately lead to layoffs and increased unemployment rates in some sectors." On the other hand, he pointed out that American industries that depend on steel, such as the construction sector and the automotive industry, are facing an increase in the cost of raw materials, which will weaken America's global competitiveness due to the rise in costs and prices, and will negatively affect the burden on consumers, which will lead to a decrease in local demand and harm the American economy in the long term.
On inflation levels, Dr. Gharaibeh said that imposing customs duties would lead to an increase in steel prices globally, as importing countries will be forced to look for alternative sources, often at higher costs, which will increase production costs for industries that depend on steel, such as infrastructure, construction and heavy equipment manufacturing, and thus will lead to an increase in the prices of final products, which will increase inflation rates in many economies.
He pointed out that China and other countries will respond to these protectionist measures by imposing customs duties on American products, and this trade war will be reflected in the disruption of global supply chains, and increase transportation and production costs, which will deepen inflationary effects and rise again. This trade war will increase uncertainty among investors and in financial markets, which in turn leads to a decline in investments and a slowdown in global economic growth.
He explained that these protectionist trade policies on steel will have short-term gains for local industries, but they will certainly harm global trade, lead to higher production costs, increased inflation, and exacerbated trade tensions between countries. This will negatively affect global economic growth rates to less than the expected 2.5 percent, and increase unemployment rates in the world. In light of the ongoing economic changes, governments need more balanced policies that take into account global impacts, instead of focusing only on protecting local markets.