Trump tariffs may imperil a delicate global economic rebound

Annette Crawford
March 12, 2018

President Donald Trump said Saturday he would spare the European Union his steel and aluminum tariffs if the bloc halts its own trade barriers to USA products, in his latest round of economic hardball. Both powers, two of the biggest trade partners with the United States, have asked for exemptions from the tariffs. After a meeting with Lighthizer over the weekend Cecilia Malmström, the European Union's top trade official, said there was still "no immediate clarity on the exact US procedure for exemption", so the discussions will continue this week.

"If this action takes effect, it would inevitably deal a serious blow to South Korea's steel exports to the U.S".

Brussels has already drawn up a hitlist of flagship American products to target for countermeasures if its exports are affected by the tariffs including peanut butter, bourbon whiskey and orange juice.

A US Commerce Department report concluded that steel import levels and global excess capacity were weakening the US internal economy and therefore threatening to impair national security, Trump noted during his White House announcement.

The European Union and Japan, the United States' top economic and military ally in Asia, also reiterated that their exports were not a threat to USA national security, rejecting Trump's justification for imposing the tariffs. China's Commerce Ministry declared itself "strongly opposed" to Trump's proposed sanctions while trade associations representing China's steel and aluminum industries brayed for Beijing to retaliate by blocking U.S. farm products and high-end consumer goods.

"I had a frank discussion with the United States side about the serious pending issue of steel/aluminum tariffs", the top European Union trade official, Cecilia Malmstrom, wrote on Twitter after the meeting. But he exempted Canada and Mexico and held out the possibility of excluding other allies.

"The imposition of tariffs will undoubtedly result in previously uninvolved sectors being retaliated against and create a risky race to the bottom, which is a threat to our domestic economy and the entire global trading system", Shapiro added.

Kosei Shindo, president of Nippon Steel Federation, said the move by the US could lead to countermeasures being implemented by other countries around the world, which would go against the spirit of the free trade system.

In a Twitter message on Saturday Trump further hinted, however, that he would not impose the aluminum and steel tariffs on the Europeans in case they also dropped their tariffs.

"A wrench has been thrown into this smoothly operating USA economy", says Bernard Baumohl, chief global economist at the Economic Outlook Group.

"We're finally taking action to correct this long overdue problem".

In a controversial move on Thursday, Trump imposed steep tariffs of 25 percent for steel and 10 percent for aluminium imports to the US.

Mr Seko called for calm-headed behaviour in the dispute.

The officials said all European Union countries, including Britain which is leaving the European Union, were behind the Commission, which handles trade issues for the 28 governments.

Mr Trump says the measures will "protect the American worker" and fulfil a campaign promise.

Turnbull added Australia had "the closest possible military and security alliance with the United States and it gets closer all of the time".

Under the rules of the World Trade Organization, Mexico could actually introduce substantially higher tariffs than the U.S. What would that do to the U.S. trade balance in steel?

Earlier, during a cabinet meeting, Trump vowed flexibility on the trade barriers, telling reporters that he could change the tariffs "up or down depending on the country".

Other reports by Iphone Fresh

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