Donald Trump’s tariffs move on EU, Canada and Mexico sparks trade war fears

AMERICAN politicians have hit back at Donald Trump’s decision to impose tariffs on steel and aluminium imports from Europe, Mexico and Canada, as the US President also plans to impose a total ban on foreign luxury cars.

House Speaker Paul Ryan was among several Republicans in Congress critical of the announcement, which came after the Trump administration failed to win concessions from the American allies.

Mr Ryan said that the administration’s decision “targets America’s allies when we should be working with them to address the unfair trading practices of countries like China”.

He said there were better ways than tariffs to help American workers and consumers. Mr Ryan did not specify those measures, but said he plans to work with Trump on “those better options”.

There are also reports the Trump administration could prevent Americans from getting their hands on automotive luxuries, too.

CNBC reported that an investigation by German magazine WirtschaftsWoche revealed that Mr Trump is hoping to block imports of German luxury carmakers.

The magazine reported that Mr Trump told French President Emmanuel Macron that he aimed to stop Mercedes-Benz models from driving down New York’s Fifth Avenue.

“When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house.” But that’s not reciprocity. “How many Chevrolets do you see in Germany? Not too many, maybe none at all,” Trump said before his inauguration in 2017.

“You do not see anything over there; it’s a one-way street,” said the real estate billionaire. Although he is for free trade, but not at any price: “I love free trade, but it must be a smart trade, so I call it fair.”

A ban will be a massive blow for brands like Audi, BMW and Mercedes-Benz.

AMERICAN ALLIES RESPOND
Canada hit back at the news immediately, announcing retaliatory duties on American goods worth up to $CAN16.6 billion ($17 billion).

Canadian Prime Minister Justin Trudeau said the US tariffs announced earlier were “totally unacceptable”.

French President Emmanuel Macron said he “deplored” the US move, declaring it an “illegal” decision.

Warning about “nationalism”, Macron told journalists he would talk later on Thursday with US President Donald Trump.

“This decision is not in line with international trade law, so it is illegal,” he said. “I think this decision is a mistake in many ways because it responds to existing international imbalances in the worst way — by breaking up and creating economic nationalism.

“And nationalism is war. That’s exactly what happened in the 30s,” he added.

Europe and Mexico pledged to retaliate quickly, exacerbating trans-Atlantic and North American trade tensions.

Financial markets fell amid fears of a trade war.

Commerce Secretary Wilbur Ross said the tariffs would be 25 per cent on steel and 10 per cent on aluminium, and go into effect on Friday, as the administration followed through on the penalties after earlier granting exemptions to buy time for negotiations.

US President Donald Trump had announced the tariffs in March, citing national security concerns.

The European Commission’s president, Jean-Claude Juncker, said the EU would move ahead with tariffs that are expected to affect roughly $7.5 billion worth of US exports. It will also lodge a case with the World Trade Organisation (WTO).

“The United States now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the United States,” Mr Juncker said in a statement. “This is protectionism, pure and simple.”

The US action widens a rift with America’s closest allies, threatens to drive up prices for companies and consumers that buy steel and aluminium, heightens uncertainty for businesses and is already alarming investors in global financial markets.

Financial markets dipped amid concerns about the disputes among trading partners, with the Dow Jones Industrial Average dropped more than 200 points.

The tariffs directed at some of the US’s most ardent allies represented the latest move in Mr Trump’s “America First” agenda that has roiled financial markets and raised the spectre of a trade war involving the US, China and some of the globe’s most dominant economies.

The trade actions have opened the US to criticism that it’s burning bridges at a time when Mr Trump is seeking to rid North Korea of nuclear weapons and help stabilise the Middle East.

“We are alienating all of our friends and partners at a time when we could really use their support,” said Wendy Cutler, a former US trade negotiator who is now vice president at the Asia Society Policy Institute.

Mr Ross told reporters that talks with Canada and Mexico over revising the North American Free Trade Agreement were “taking longer than we had hoped”.

Talks with Europe had “made some progress” but not enough for additional exemptions, he said in a conference call from Paris.

“We continue to be quite willing and indeed eager to have further discussions,” Mr Ross said. He said he planned to travel to China on Friday for trade talks between the world’s two biggest economies.

European officials had braced for the tariffs and the EU has threatened to retaliate against US orange juice, peanut butter and other goods in return.

In terms of the NAFTA talks, the tariffs could hinder the negotiations among the North American neighbours.

On NAFTA, Mr Ross said there was “no longer a very precise date when they may be concluded and therefore (Canada and Mexico) were added into the list of those who will bear tariffs.”

Brazil, Argentina and Australia have agreed to limit steel shipments to the US in exchange for being spared the tariffs, the Commerce Department said. Tariffs will remain on imports from Japan.

Fears of a global trade war are already weighing on investor confidence and could hinder the global economic upturn. European officials argue that tit-for- tat tariffs will hurt growth on both sides of the Atlantic and Canada said before the announcement that it would respond in kind.

“Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States,” Canadian Foreign Minister Chrystia Freeland said before the tariffs were announced. “The government is absolutely prepared to and will defend Canadian industries and Canadian jobs. We will respond appropriately.”

German Chancellor Angela Merkel stressed her opposition even before the US announcement, saying the looming tariffs were incompatible with World Trade Organisation rules.

She said if there were no exemptions, “We will respond in an intelligent, decisive and joint way.”

France’s finance minister, Bruno Le Maire, called the US tariffs “unjustified, unjustifiable and dangerous”.

“This will only lead to the victory of those who want less growth, those who don’t think we can develop our economies across the world. We think on the contrary that global trade must have rules in a context of multilateralism. We are ready to rebuild this multilateralism with our American friends,” he said.

The EU trade commissioner, Cecilia Malmstrom, said the EU “did everything to avoid this outcome.”

Noting her discussions with US officials, she said. “I have argued for the EU and the US to engage in a positive trans-Atlantic trade agenda, and for the EU to be fully, permanently and unconditionally exempted from these tariffs.”

White House spokesman Raj Shah told Fox News: “The president’s actions are about protecting American steel, American aluminium. They’re critical for national security.”

Tariffs on steel and aluminium imports to the US can help local producers of the metals by making foreign products more expensive. But they can increase costs more broadly for US manufacturers that cannot source all their needs locally and have to import the materials. That hurts the companies and can lead to more expensive consumer prices, economists say.

“Unilateral responses and threats over trade war will solve nothing of the serious imbalances in world trade. Nothing,” French President Emmanuel Macron said.

In a clear reference to Mr Trump, Mr Macron added: “These solutions might bring symbolic satisfaction in the short term. … One can think about making voters happy by saying, ‘I have a victory, I’ll change the rules, you’ll see.”’

But Mr Macron said those “who waged bilateral trade wars … saw an increase in prices and an increase in unemployment”.

Mr Ross criticised the EU for its tough negotiating position. But German Economy Minister Peter Altmaier insisted the Europeans were ready to negotiate special trade arrangements, notably for liquefied natural gas and industrial goods, including cars.