Trump's tariff move 'stupid', faces retaliation from Canada, China, EU

The tariffs rest on a little-used legal provision that allows Trump to restrict imports to try to bolster American industrial base in interest of national security

A day after US President Donald Trump took a swing at the country’s trading partners by threatening stiff and sweeping tariffs on steel and aluminum, they hit back. They promised to retaliate against quintessential American goods like Kentucky bourbon and Harley-Davidson motorcycles.

That is likely to turn into a wave of protest aimed at American products as other countries, including traditional allies, respond to Trump’s plan to clamp down on imports of metals from overseas.

Canada, China and the European Union have already said they would respond with tariffs of their own that could lead to billions of dollars in American export losses. Those levies would harm the farmers and business interests that the Trump administration has promised to protect and would fuel a trade fight that could undermine the president’s goal of strengthening American industry.

Li Xinchuang, the vice-chairman of the China Iron and Steel Association, called the president’s move “stupid,” saying, “Trump’s decision does no good to everyone except a few American steel enterprises.”

And John M Weekes, Canada’s negotiator for the North American Free Trade Agreement in the early 1990s, said the president’s “notion is going down very badly in Canada.” “It certainly will have a negative effect on our bilateral relationship,” he said.

American businesses are more tied to the global economy than ever before, and the Trump administration is seeking concessions from trading partners to put American companies on a more competitive footing. Negotiators from Canada, Mexico and the United States were meeting in Mexico City to hash out changes to Nafta, and Washington is trying to revise a trade deal with South Korea. The possibility of tariffs complicates both efforts.
 

Trump appeared unmoved by the blowback, posting a series of Twitter messages on Friday defending his proposal to impose tariffs of 25 per cent on steel and 10 per cent on aluminum.

“We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” Trump tweeted.

Yet the United States does not control the global economy, and the tariffs, which Trump is expected to sign next week, could incite other countries to challenge it at the World Trade Organization (WTO). If the organisation rules against the US, that will test the Trump administration’s willingness to follow global trade rules.

The tariffs rest on a little-used legal provision that allows Trump to restrict imports to try to bolster the American industrial base in the interest of national security. That power will face scrutiny by the WTO but, perhaps more significant, could prompt other countries to follow suit in using national security as a reason to wall off their markets. American technology companies, agricultural producers and other industries could ultimately lose business abroad as nations seek to erect similar barriers.

Robert L Shanks, Ford Motor’s chief financial officer, said commodities markets had already started to price in increases for steel and aluminum on the expectation that Trump would impose the tariffs. The effect on Ford, he said, is “not positive” given the automaker uses those metals in the cars they produce.

© 2018 The New York Times News Service