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Europe, China warn Trump of response if trade war with U.S. erupts

Reuters  |  PARIS/BEIJING 

By and Ben Blanchard

PARIS/(Reuters) - and warned on Thursday they would respond in the event of a trade war with the United States, with one saying retaliation could also target goods from areas governed by his

Trump was expected later in the day to sign a proclamation imposing 25 percent tariffs on imports and 10 percent on aluminium, though a said this could slide into Friday as documents had to be cleared through a legal process.

Both and voiced hope that a trade war could be averted, and the raised the prospect that Trump could consider exempting the EU's 28 member states from the measures along with U.S. neighbours and

Some countries advised against any overhasty reaction to Trump's plan, which has drawn fire at home as well as rattling global financial markets, particularly which as a close trading partner of the has perhaps most to lose.

But the talked tough. "If puts in place the measures this evening, we have a whole arsenal at our disposal with which to respond," said.

Counter-measures would include European tariffs on U.S. oranges, tobacco and bourbon, he said, adding that some products under consideration for an EU riposte were largely produced in constituencies controlled by Trump's

"We want to understand that this would be a lose-lose situation," Moscovici told

The EU is by far the biggest trading partner of the by value and, after China, member states have together the biggest trade surplus with the country. Once approved by Trump, the tariffs would go into effect after two months.

NECESSARY RESPONSE

The tariffs are designed to counter cheap imports, especially from China, which Trump says are undermining and jobs.

In Beijing, said and the did not have to be rivals, and history showed that trade wars were not the correct way to resolve problems.

"Especially given today's globalisation, choosing a trade war is a mistaken prescription. The outcome will only be harmful," he said on the sidelines of an annual meeting of "would have to make a justified and necessary response."

Trump addressed China in tweets on Wednesday, demanding that lay out plans for reducing its trade surplus with the United States by $1 billion. China had a record $375.2 billion goods surplus with the United States last year.

Trade tensions between the world's two largest economies have risen since Trump took office in 2017, and although China accounts for only a small fraction of imports, its massive industry expansion has helped produce a global glut of that has driven down prices.

Data on Thursday showed Chinese exports were up 44.5 percent in February from a year earlier. That left it with a global trade surplus of $33.74 billion, and a January-February surplus with the United States of $42.92 billion.

JOBS THREAT

Trump's administration has faced growing opposition to the tariffs from prominent congressional and business officials worried about their potential impact on the economy.

The has said there could be a 30-day exemption from the tariffs for and - which are members of the (NAFTA) - and some other countries based on national security..

Trump wants to renegotiate the NAFTA and a linked any extension of the exemption to progress in NAFTA talks.

In Brussels, Vice said he had read that Britain might be in line for an exemption too. While Britons have voted to leave the EU, the country remains a member until next year.

"If they try to make an exemption for one of our member states, it means the EU as a whole," he told a conference, adding that the EU was still trying to persuade that tariffs were a bad idea.

Katainen cited tit-for-tat trade measures which have been blamed for deepening the Great Depression, and more recent experience. "We don't need to go to the 1930s. It's enough to go to the beginning of the 2000s when the U.S. authorities imposed for It meant in practice that in the U.S. they lost thousands and thousands of jobs," Katainen said.

Canada urged caution. said Trump had made it clear in a phone call that if he could get a good trade deal there would be no need for tariffs on Canada.

Trudeau declined to say whether or how Canada would retaliate. "We need to wait and see what this is actually going to do," he said.

(Additional reporting by Michael Martina, Elias Glenn, Kim Coghill, Brian Love, and Andrea Hopkins; Writing by David Stamp; Editing by Mark Heinrich)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, March 08 2018. 18:42 IST
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