America’s closest allies, Canada, Mexico and European states are perplexed and angry. There were plenty of warning signs that Donald Trump sought what he calls fairer trade practices which was one of his campaign pledges. Most thought his threat to slap them with crippling trade tariffs on steel and aluminium imports was a mere negotiating bluff. He wouldn’t, he couldn’t, they believed. But he did.
US Treasury Secretary Steven Mnuchin came under attack at a recent meeting of G7 finance ministers. Japan, Canada, France, Germany, Italy and the UK signed a declaration laying out their mutual concerns and disappointment. Trump can expect a frosty reception at the upcoming summit of the world’s richest nations in Quebec.
When Canada’s affable Prime Minister Justin Trudeau, who like his Mexican counterpart was counting on maintaining the North American Free Trade Agreement (Nafta), was asked what was behind Trump’s sudden move he said he didn’t know.
Trudeau has called the tariffs, ostensibly imposed on national security grounds, “insulting and unacceptable”. This is insulting to our soldiers who have fought and died together in the Second World War and the mountains of Afghanistan, he said.
Britain’s Prime Minister Theresa May, who was previously assured by the US president that post-Brexit Britain would be at the front of the queue for a trade deal, expressed her disappointment while condemning Trump’s “unjustified” action.
The EU Trade Commissioner, Cecilia Malmstrom, says the US is “playing a dangerous game” calling Trump’s decision “pure protectionist” and “illegal”. The EU along with others affected plans to lodge a complaint with the World Trade Organisation (WTO).
China is high on the list of Trump’s targets despite bending over backwards to be accommodate his concerns promising to buy more Made in the US products and to cut its own tariffs. Strangely, America’s biggest competitor Beijing is getting off lightly compared to US allies.
The Independent’s Diplomat Editor Kim Sengupta asserts that China could benefit from America’s hostile behaviours. “China and India, engaged in decades of acrimony, have seen a hurried bolstering of relations,” he writes, while underscoring the likelihood of China’s takeover of Iran’s South Pars gasfields from Total poised to withdraw from its deal with Tehran when US anti-Iranian sanctions kick-in.
Notably, the EU is warming towards Russia. Jean-Claude Juncker, president of the European Commission, has signalled a rapprochement with Moscow. France’s President Emmanuelle Macron is keen to strengthen economic ties. Putin and the German Chancellor Angela Merkel find themselves in the same boat fending off US attacks on their nations’ business interests and cooperating on the construction of a gas pipeline project against vociferous US objections.
Almost all economic strategists are similarly mystified when the administration’s triggering of retaliatory measures that could easily escalate into a trade war serves no one in the long run.
Indeed Trump risks market turbulence and in the worst case scenario global recession. Nevertheless the White House incumbent is unfazed threatening to slap duties on the import of Germany luxury cars, again for reasons of national security — a ridiculous pretext being used to circumvent WTO rules.
“Whenever I’m thinking about Trump, I’m lost,” said Juncker — and so say all of us. He makes decisions on a whim ignoring advice from close advisers. His main concern is his own aggrandisement. We can assume that the goal underpinning the trade moves is to fire-up his blue-collar base in America’s Rust Belt suffering decades of decline in the run-up to midterm elections that could potentially result in a Democrat dominated Congress. This time the midterms will be a virtual referendum on the Trump administration.
Little do those in the industrial Midwest engaged in steel, auto or agricultural industries realise that they have the most to lose if Canada and Mexico, which together import over a quarter of their products/produce retaliate in kind.
Linda S. Heard is an award-winning British political columnist and guest television commentator with a focus on the Middle East.
