March 21, 2018

Trump raises trade war fears with tariffs

14 March 2018, 04:23 | Opal Carroll

Trump raises trade war fears with tariffs

Donald Trump signs order imposing tariffs on steel and aluminium - but promises exemptions for 'real friends'

Trump's threat of tariffs is perhaps simply a strategic salvo created to elicit further concessions from Canada and Mexico in the NAFTA negotiations.

Wilson says the problem could grow worse if the USA pulls out of the North American Free Trade Agreement with Canada and Mexico.

"We have some friends and some enemies where we have been tremendously taken advantage of over the years on trade and on military", he said.

Canada, America's neighbor to the north, was its single-largest source of steel previous year, followed by Brazil, South Korea, Russia, Mexico, Japan and Germany.

His move, an assertive step for his "America First" agenda, has rattled allies across the globe and raised questions at home about whether protectionism will impede USA economic growth.

Mr. Mnuchin spoke at a House appropriations subcommittee hearing on the Treasury Department's 2019 budget.

"The proclamation will have a clause that does not impose these tariffs immediately on Canada and Mexico, and its going to give us an opportunity and one of the best guys in this administration, Ambassador Robert Lighthizer the opportunity to negotiate a great deal for this country", Navarro said.

Republicans say they fear the move could dampen the positive economic effects from the GOP's $1.5 trillion tax-cut law, which they're featuring as a key part of their 2018 midterm strategy.

"Today, I am defending America's national security by placing tariffs on foreign imports of steel and aluminum", Trump said in the Roosevelt Room, flanked by steel and aluminum workers. While it was earlier reported that the order was to be signed Thursday, a person familiar with the planning said it would likely be pushed back to allow more time to prepare the legal documents.

Despite the increased pressure at home and overseas, Trump insisted he would "not back down". "It meant in practice that in the USA they lost thousands and thousands of jobs", Katainen said.

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The WTO's Dispute Settlement Body has never arbitrated a case filed under its national security clause - known as Article 21 - which was first enshrined after World War II in the General Agreement on Tariffs and Trade (GATT).

Ford has said it also uses mostly American-made steel for vehicles produced in the United States.

While economic fallout from Trump 's tariffs remains unclear, the political fallout has been swift.

But Trump is pointing to national security as the reason for the tariffs; he's said, "If you don't have steel, you don't have a country".

The president triggered anxiety last week when he said a global trade would be "easy to win" and issued a threat in particular to German carmakers, one of which, BMW, runs a major plant in the US. Tariffs would "seriously impact the normal order of worldwide trade", the Commerce Ministry said. "And it hurts American consumers", he said.

Trump kept Canada and Mexico as potential tariff targets because that served US interests in winning concessions in ongoing NAFTA negotiations.

More than 50 percent of steel and aluminum exports come from allies in the European Union, Canada, Japan, and South Korea. Such a conflict "will only harm everyone and China will surely make a justified and necessary response". But Trump's proposed tariffs are quite broad-sweeping and include key USA allies.

In Brussels, European Commission Vice President Jyrki Katainen said US protectionism would be bad for America itself. White House economic adviser Gary Cohn is summoning executives from USA companies that depend on the metals to meet this week with Trump to try to persuade him to blunt or halt the tariffs announced last week, according to two people familiar with the matter.

Roy Rickhuss, general secretary of steelworkers' union Community, said: "Donald Trump's short-sighted strategy will put jobs at risk on both sides of the Atlantic".

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