US President Donald Trump has made major changes in the rules related to import of steel, aluminum and copper. This step has been taken to strengthen America’s industry and simplify the tax system. Earlier this system was quite complex. At the same time, now an attempt has been made to simplify it so that it is easier for companies to understand and implement the rules.
Under the new system, 50% tariff on basic i.e. raw steel and aluminum will remain applicable as before. Technically, this will be a new tariff because the US Supreme Court has declared Trump’s earlier imposed tariff invalid. But the special thing in the new rules is that this tax will not be imposed on the declared price of import, but on the actual selling price. Its purpose is to rein in those companies which tried to save tax by showing low prices.
Relief to derivative products
Products which are not directly metal, but are made from it. Like machines, equipment or everyday things, the rules on them have been changed. If the amount of steel, aluminum or copper in a product is less than 15%, then no tariff will be imposed on it. For example, if a little aluminum is used in a perfume bottle, then tax will not have to be paid on it. Due to this, small and light metal products can become cheaper.
New rule on heavy metal products
If the amount of these metals in a product is more than 15%, then 25% tariff will be imposed on it. This tax will not be applicable only on the price of metal, but on the price of the entire product. Like washing machines or gas stoves, which are mostly made of steel, 25% tax will have to be paid directly on them. This may increase the price of such products.
Industrial sector got relief
Tariff on certain industrial machines and electrical equipment has been reduced to 15%. This relief will remain applicable till 2027. Its purpose is to promote the manufacturing sector in America, so that companies can easily import necessary machines. Another interesting change is that if a product is made abroad, but the steel, aluminum or copper used in it is completely American, then only 10% tariff will be imposed on it. The American metal industry will benefit from this.
Why was this change necessary?
In the old system, there were different rules for thousands of products, which caused a lot of trouble to the companies. It was difficult to calculate the amount of metal in each product. Now the government has tried to make it easy and transparent. The government believes that this will stop tax evasion and the system will be cleaner. Although it will not have a huge impact on the overall economy, the government’s earnings from tariffs may increase slightly.
What will be the impact on India?
The impact of America’s continuing 50% tariff on steel, aluminum and copper will not be limited to its domestic economy only, but its impact can also be seen on global markets including India. Increase in the cost of products made from these metals may lead to a rise in prices, which will increase pressure on the global supply chain. It can be expensive for countries like India to export to the American market, which will have a direct impact on trade. Apart from this, price volatility in the international market is also likely to increase.
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