President Donald Trump set the stage for a trade war after slapping tariffs on steel and aluminum imports, daring other countries to retaliate and leading the European Union to warn that it would target iconic American brands.
The aggressive stance stoked fears of trade retaliation and roiled investors.
After the decision on tariffs initially depressed global markets, US stocks pared losses of more than 1 percent Friday, while Treasuries slumped with the dollar as the wave of selling sparked by the threat of a trade war eased.
The official response in China, the world’s largest steel producer and the main target of the tariffs, was muted. Foreign Ministry spokeswoman Hua Chunying said in Beijing Friday that China urges the U.S. to follow trade rules.
Industry insiders were less restrained. The U.S. measures “overturn the international trade order,” Wen Xianjun, vice chairman of the China Nonferrous Metals Industry Association, said in a statement. “Other countries, including China, will take relevant retaliatory measures.”
Li Xinchuang, vice chairman of the China Iron and Steel Association, called the move “stupid.”
China has already launched a probe into U.S. imports of sorghum, and is studying whether to restrict shipments of U.S. soybeans - targets that could hurt Trump’s support in some farming states. While China accounts for just a fraction of U.S. imports of the metals, it’s accused of flooding the global market and dragging down prices.
The press office of the Mexican economy ministry declined to immediately comment, but Bloomberghas reported that Mexico will place retaliatory tariffs on U.S. goods if President Donald Trump includes it on a list of nations that would face steel tariffs, according to a person close to the Latin American country’s position.
Mexican Economy Minister Ildefonso Guajardo plans to discuss the issue with U.S. Commerce Secretary Wilbur Ross in a meeting in Washington on Wednesday, according to the person, who asked not to be named because the meeting is private. A 2009 trucking dispute, when Mexico imposed retaliatory tariffs on about 90 American products totaling $2.4 billion worth of annual exports, serves as an example of what Mexico can do, the person said.
Hours after Trump tweeted that “trade wars are good, and easy to win,” European Commission President Jean-Claude Juncker said the bloc is prepared to respond forcefully by targeting imports of Harley-Davidson Inc. motorbikes, Levi Strauss & Co. jeans and bourbon whiskey from the U.S.
The EU is prepared to retaliate against select U.S. imports in a way that would maximize political pressure on American leaders. Harley-Davidson is based in House Speaker Paul Ryan’s home state of Wisconsin, while bourbon whiskey hails from the state of Senate Majority Leader Mitch McConnell. San Francisco-based Levi Strauss is headquartered in House Minority Leader’s Nancy Pelosi’s district.
Canada’s steel sector could be wounded by U.S. tariffs even if the country is exempt from the 25 percent duty promised by President Donald Trump, as cheap steel previously sold south of the border floods into Canada, industry leaders said on Friday.
Canadian officials are trying to secure an exemption from potential U.S. tariffs on steel and have threatened retaliation if the plan goes ahead.
But even a deal that protects exports from Canada, the biggest steel supplier to the United States, would not solve all of the industry’s problems.
“It would significantly harm Canadian producers in our home market, just swamping the marketplace with that imported steel,” said Canadian Steel Producers Association President Joseph Galimberti on the proposed tariff.
A letter from nine Canadian steel executives sent to Prime Minister Justin Trudeau and other government ministers on Thursday warned that the tariff could displace 13 million tonnes of steel currently sold in the United States.
Trade is a major contributor to global economic growth and the International Monetary Fund (IMF) has repeatedly warned that protectionist policies could jeopardize the worldwide recovery.
“The import restrictions announced by the US President are likely to cause damage not only outside the US, but also to the US economy itself,” IMF spokesman Gerry Rice said in a statement Friday.
US Federal Reserve
Newly-installed Federal Reserve chief Jerome Powell this week also cautioned against tariffs as a way to address trade issues.
Powell said “trade is a net positive” to the US economy and “the tariff approach is not the best approach” to helping those communities left behind.
The UAE exported 569,405 metrics tonnes of aluminium with a value of $1.2 billion to the US in 2017, which represents about 13 per cent of the total US aluminium imports, according to a US Department of Commerce Report seen by Gulf News.
The UAE exported also 290,221 metric tonnes of steel to the US in 2017, although the total value of those exports was not available. Steel from the UAE makes up less than 1 per cent of all US steel imports. Gulf News reached out to several aluminium and steel companies in the US for comment, but all either declined or where unavailable for comment.
When a country Taxes our products coming in at, say, 50%, and we Tax the same product coming into our country at ZERO, not fair or smart. We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!
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!
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!— Donald J. Trump (@realDonaldTrump) March 2, 2018
When a country Taxes our products coming in at, say, 50%, and we Tax the same product coming into our country at ZERO, not fair or smart. We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!— Donald J. Trump (@realDonaldTrump) March 2, 2018
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!— Donald J. Trump (@realDonaldTrump) March 2, 2018
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!