Trade War is Not Likely
Major steel and aluminium producing nations on Friday condemned US President Donald Trump’s plan to impose tariffs on the industry, as one would expect, and stock markets plunged as the media whipped up fears of an imminent tit-for-tat trade war.
After weeks of rumour and counter-rumour about his administration’s intentions, Trump on Thursday announced he would sign off on measures designed to protect US producers “next week”.
The tariffs — 25 percent on steel and 10 percent on aluminium — cover two materials that are the lifeblood of the construction and manufacturing sectors.
The announcement was greeted with fury within key US trading allies such as Canada, the EU, Australia and Mexico, as well as rival China.
China, which has been in Trump’s crosshairs over its trade practices since his presidential campaign, urged the US to “exercise restraint in using trade protection tools and respect multilateral trade rules”.
“If all countries followed the example of the United States, there will undoubtedly result in a serious impact on the international trade order,” foreign ministry spokeswoman Hua Chunying told a regular news briefing.
European Commission chief Jean-Claude Juncker said the EU “will react firmly” to defend its interests.
“We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk,” he added.
Of course all of those things were said, but the reality of their existing subsidies of industry were not mentioned
German Foreign Minister Sigmar Gabriel called on the EU to respond “with determination”, terming the move from Washington “not at all acceptable” and urging Trump to rethink the announcement. Germany has been illegally subsidizing key industries for years.
– ‘Unacceptable’ –
Canadian Trade Minister Francois-Philippe Champagne responded even more bluntly.
“Any tariffs or quotas that would be imposed on our Canadian steel and aluminum industry would be unacceptable,” Champagne told parliament. “Any such decision would have an impact on both sides of the border.” Trudeau was looking for a new “Tariff War” outfit at the time it was reported.
Australia Trade Minister Steve Ciobo said his biggest concern was now “retaliatory measures” by other major economies.
“That’s in no-one’s interests,” he told reporters.
Trump has long threatened to impose tariffs on steel and aluminium, accusing other countries of dumping and deploying “unfair” trade practices.
He has been particularly critical of China, although steel and aluminium each account for less than one percent of the country’s total exports to the United States.
The timing of Trump’s announcement was provocative for Beijing — its top economic envoy Liu He was in Washington and holding meetings at the White House on Thursday.
“They candidly exchanged their views, building the necessary conditions for the next step in deepening cooperation,” Hua said of the meetings with US officials.
China has previously warned it was ready with counter-measures should the Trump administration deploy tariffs, but the foreign ministry did not indicate that any such moves were in the works.
The White House has embarked on a campaign to renew American infrastructure, with steel likely a major input.
But Trump’s announcement has faced significant domestic opposition, including within his own White House and party.
US automakers, oil and gas producers and other industry groups publicly urged the president not to impose new trade barriers on the metal imports, warning the measures could jack up prices and invite reprisals, harming the economy.
The danger is free and fair trade.