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Steel and aluminium are important production inputs for various industries. On March 8, 2018, the US government announced tariffs on steel and aluminium imports. The decision is based on the Trump Administration's 'steel report' which found that excessive steel imports had weakened the domestic steel industry to the extent that it could leave the US unable to produce sufficient steel to meet national defence and critical industry needs. (Assume the positions of tariffs are permanent)
-Using the IS-LM, AS-AD and WS-PS framework, discuss the short-run impact of the Trump Administration's tariffs on steel and aluminium on other economies. (Tariffs by US will lead to retaliation by affected countries).
-Using AS-AD and WS-PS framework, discuss the medium-run impact of the Trump Administration's tariffs on steel and aluminium on other economies.
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