Taiwanese steel producers are hurt by the tariffs because they have effectively been forced out (at least partially) of a significant market for their products, thus their sales will decrease. Also, the price of steel goods in the rest of the world has probably decreased (if the U.S. is a major importer of steel), since the steel goods that would have been consumed by the U.S. without the tariffs have likely flooded the world steel market, boosting supply without a corresponding increase in demand. The principles of supply and demand dictate that the result in lower prices for steel goods in the rest of the world. As a result, Taiwanese steel producers are hit with a "double whammy," since their overall sales decrease due to the closing of the U.S. steel market and the price they receive for their other sales around the world decreases due to increased supply. Taiwanese steel factory workers have also likely been hurt by the tariffs, since their employers are now facing decreased demand and decreasing revenue, both of which can result in the producers cutting capacity, and therefore jobs. If the world steel price does decrease, Taiwanese steel-consuming businesses (and their employees) and Taiwanese consumers will also benefit, since their costs would decrease.
It is important to note that the steel tariffs imposed by the U.S. have the potential to affect other agents (in both countries) not involved in the production or consumption of steel. Taiwan has filed a protest with the World Trade Organization regarding the legality of the U.S. steel tariffs, and should the WTO find in favor of Taiwan, Taiwan, may be allowed to impose retaliatory tariffs against U.S. products, most likely affecting industries other than the U.S. steel industry. Although the U.S. tariffs are only supposed to be in effect for three years as a temporary measure, meaning that this dispute and any possible retaliatory actions would be temporary at worst, it is possible (and even likely, as history has shown), that these temporary tariffs may eventually become ongoing. Overall, the steel tariffs imposed by the U.S. in 2002 have the potential to become a serious barrier to U.S. international trade growth and the benefits that it brings.
Be Sure to Continue to Page 5 of "Trade in Iron and Steel Between the U.S. and Taiwan ".
