Trump’s tariff choices ease impact on China, Russia: Goldman Sachs

President Trump’s proposal to impose across-the-board tariffs of 25 percent on steel and 10 percent on aluminum would lessen their effects on China and Russia in comparison to more targeted restrictions, according to an analysis from Goldman Sachs.

The Goldman Sachs report said the Trump proposal would hurt Canada, Mexico and the European Union (EU) more than China and Russia, which have been criticized by proponents of restrictions on imported steel with flooding the market.

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“By imposing across-the-board tariffs to all steel and aluminum imports, the larger economic impact is on Canada, Mexico and the EU, and it ironically eases the economic impact to China and Russia,” a bank analysis released Monday said.

According to the analysis, the choice of broad-based tariffs would create a two-tiered market, because the U.S. does not produce the same kinds of metals it imports. Those imports largely come from U.S. allies such as Canada, Mexico and the EU.

Companies are unlikely to make the kinds of investments needed to produce those kinds of metals given the uncertainty of both policy and market demands, the report said. Americans will bear the brunt of the tariffs, and simply pay more for those imported metals.

A more surgical approach, however, would cause less pain to the U.S. economy and hit countries such as China and Russia instead of U.S. allies, it said.

“Had the tariffs only been targeted at non-U.S. allies that represent 47 percent of U.S. steel imports and 21 percent of U.S. aluminum imports, global markets could have adjusted. In the end, targeted tariffs would have mostly created a redistribution of trade flows with only a modest and temporary rise in U.S. metal prices until U.S. production adjusted appropriately to offset the targeted imports,” the analysis read.

Congressional Republicans are appealing to Trump to scale back his tariffs decision.

“I think the smarter way to go is to make it more surgical and more targeted,” Speaker Paul Ryan (R-Wis.) said on Tuesday.

Trump is expected to finalize his decision on tariffs this week, but thus far has indicated that he intends to maintain his course.  

“No, we’re not backing down,” Trump told reporters at the White House on Monday, when asked about the plan.