The U.S. is actually on shaky ground with its allies following President Donald Trump’s proposed tariffs on steel as well as aluminum.
While fears of a trade war ripple through the global economy, experts are assessing the potential impact on national security, private sector industry as well as America’s relationship with partners.
“We’ve seen which oftentimes trade is actually political as well as security cooperation is actually political as well as the two intertwine,” Remy Nathan, vice president for international affairs at the Aerospace Industries Association, told CNBC.
“When we are enjoying Great trade relations with additional countries we have positive foreign relations, positive security cooperations, as well as they are oftentimes more interested in purchasing U.S. defense equipment as well as working with our militaries,” Nathan said. “The opposite is actually also true, as well as so those are real concerns which we have.”
He added: “which all depends on how those countries evaluate the steps which we take as well as what measures they choose to retaliate in some fashion towards us.”
On Friday, Canada’s prime minister, Justin Trudeau, called U.S. tariffs on steel “unacceptable.”
The bilateral relationship between the U.S. as well as Canada has suffered via the bitter trade dispute between aircraft manufactures Boeing as well as Bombardier as well as NAFTA renegotiations.
“The U.S. as well as Canada are about as close partners on defense industrial activities as you can imagine,” Andrew Hunter, Director of the Defense-Industrial Initiatives Group at the Center for Strategic as well as International Studies, told CNBC.
“The U.S. law actually treats Canadian entities as being part of the national technology industrial base on equal footing with U.S. suppliers in many respects,” he said. “from the current situation, you already have these large pain points from the relationship as well as which decision is actually only going to exacerbate which.”
“which is actually clearly bad for our allies as well as partners,” Hunter added.
Speaking further to the international ramifications, Seth Cropsey, former Deputy Undersecretary of the Navy under the Reagan as well as Bush administrations, was concerned which the U.S. was moving toward a protectionist economy.
“If we head down the road of protectionism, then yes, which will certainly affect the cost of American defense goods as well as which’s a matter of concern,” said Cropsey, who is actually currently the Director of the Center for American Seapower at the Hudson Institute.
In a shock announcement Thursday, Trump said the U.S. will set a fresh tariff of 25 percent on steel as well as 10 percent on aluminum imports. The tariffs are slated to take effect as early as next week as well as will be applied broadly, which counters Secretary of Defense James Mattis’ recommendation of targeted tariffs.
In a Department of Defense memo related to the proposed tariffs, Mattis said which while the Pentagon “concurs with the Department of Commerce’s conclusion which imports of foreign steel as well as aluminum based on unfair trading practices impair the national security” the U.S. military requirements for steel as well as aluminum each only represent about 3 percent of U.S. production.
Mattis cited concerns about the “negative impact on our key allies” as well as said which therefore “targeted tariffs are more preferable than a global quota or global tariff.”
“While which is actually true what the DoD said about being able to rely on U.S. domestic sources of supply, I think the analysis didn’t get down to the supply-chain level,” Nathan noted.
“Throughout the supply chain you’ve got companies which make products for both the civil market as well as the military market. The contracts on the civil side tend to be higher volume as well as higher profit margin, as well as which helps them underwrite their investments, hiring as well as innovation on the military side of the market,” Nathan said. “So when you do things which impact the success of their commercial enterprise, as well as putting tariffs on steel as well as aluminum could certainly do which, then [there is actually] the big question mark about what pressure are you going to put on the defense side of their business.”
Echoing similar sentiments, Eric Fanning, CEO of the Aerospace Industries Association as well as former secretary of the Army from the Obama administration, told CNBC which the proposed tariff will “impact companies big as well as little from the aerospace as well as defense world.”
“The aerospace as well as defense industry generates the largest net surplus from the manufacturing sector at over $86 billion a year. We’ve got 2.4 million people who work from the aerospace as well as defense industry, they are paid almost double the national average, as well as these companies thrive on the exports of their products,” Fanning said.