The Impact of the Trade Act on Euro Exchange Rates

4 April 2015
A study of the impact of Section 203 (B) (1) of the Trade Act of 1974 on the steel industry and the Euro exchange rates.

This is an in-depth analysis of the risks and pitfalls of possible U.S. tariffs on European Steel products, as in Section 203 (B) (1) of the Trade Act of 1974. It examines the global trade agreements, and their goal of creating a level playing ground for both industrialized and emerging countries. The paper argues that U.S. tariffs on imported steel will not have a direct effect on the exchange rate of the Euro and the U.S. dollar, and that the solution for the steel industry depends on the ability of the world to act as a global community in solving a global problem. Irrational presidential manners and international trade wars may cause a ripple effect that is more dangerous than the damage to one industrial sector. This is precisely the situation that we face with the steel industry. The paper includes statistics and tables to support its thesis.

Table of Contents
Size of the US-European import-export trade.
Mass Media Reactions to the Tariffs
Other Countries’ Reactions
History of the Steel Industry in the US
The Situation from an Economist’s Standpoint
Conclusion
Works Cited
Appendices
“Free Trade has been a key agenda for the past three presidents. In an expanding global market, tariffs and trade policies are more important today than they have been in the past. More and more countries are forming alliances such as the North American Free Trade Agreement (NAFTA), the Asian Alliance, and the European Union (EU). These trade agreements are meant to level the playing for all countries, both industrialized and emerging countries.
President Bush’s trade policy is aimed at helping to generate American jobs, open markets to American products, and provide economic growth. Sometimes massive increases in imports can have a devastating effect on US industries. [This has been the case for the US steel Industry and is the issue addressed in Section 203 (B) (1) of the Trade Act of 1974. Foreign steel makers have had the luxury of government support which allowed them to have large capacity for expansion and as a result they have flooded the US market with cheap imports. Since 1998, thirty percent of all US steel producers have filed for bankruptcy as a result of falling steel prices in the US. The World Trade Organization allows countries who have been severely effected by changes in trade policy to take temporary actions to provide ailing relief to suffering industries. This is the premise behind the Presidential Proclamation issued by President Bush (Congressional Report, 1974).]”

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