The tariff war is well under way

US President Donald Trump's tariff policy has raised a wave of concern about the stability of international trade and its impact on European economies. Beyond the figures and immediate measures, it is crucial to understand the underlying mechanisms, the political motivations and the potential long-term repercussions of these decisions. To explore these aspects in depth, we interviewed Dr Harrison Mbori, researcher at the Luxembourg Centre for European Law, and Professor Pierre Picard, professor of microeconomics at the University of Luxembourg.

Lëtzebuerger Journal: Could you begin by giving us the precise context of these steel tariffs, detailing how they came about and the main players involved?

Dr. Mbori: The story of these tariffs really begins in 2018, when the Trump administration took the decision to impose customs duties of 25% on steel and 10% on aluminium imported into the United States. These measures, officially justified by the need to protect national security and revitalise the US steel industry, quickly triggered trade tensions with a large number of the US's trading partners. These included the European Union, Canada, Mexico, China and others. Initially, some countries, including the EU, benefited from a temporary exemption, but this was not renewed, leading to the effective application of tariffs and an escalation of tensions. It is important to stress that this policy was part of a broader vision of the Trump administration, favouring a bilateral and often protectionist approach to international trade.

How do you analyse the economic justification for these tariffs, and to what extent do you think it was really well-founded?

Professor Picard: It's true that the economic argument was put forward, in particular the need to protect American jobs and the steel industry. However, it seems to me that this justification was partly a pretext. The political dimension played a predominant role. The Trump administration's announcements generally had the effect of creating a chain reaction, where the other players felt obliged to respond.

Dr Mbori: It's important to consider that the US steel industry was already in trouble before the tariffs were introduced, and that the structural problems it was facing could not be solved by protectionist measures alone. There was also a national security argument put forward, which was, however, open to question.