World hits back at U.S. in trade fight
Economists worry a trade war is inevitable
WASHINGTON — The United States attacked first, imposing tariffs on steel and aluminum from around the globe and threatening to hit tens of billions of dollars in Chinese products. Now, the world is punching back.
The European Union is set Friday to slap tariffs on $3.4 billion in American products, from whiskey and motorcycles to peanuts and cranberries. India and Turkey have already targeted U.S. products, ranging from rice to autos to sunscreen.
And the highest-stakes fight still looms: In two weeks, the United States is to start taxing $34 billion in Chinese goods. Beijing has vowed to immediately retaliate with its own tariffs on U.S. soybeans and other farm products in a direct shot at President Donald Trump’s supporters in America’s heartland.
The tit-for-tat conflict between the United States and China — the world’s two largest economies — is poised to escalate from there. The rhetoric is already intensifying.
“We oppose the act of extreme pressure and blackmail by swinging the big stick of trade protectionism,” a spokesperson for China’s Commerce Ministry said Thursday. “The U.S. is abusing the tariff methods and starting trade wars all around the world.”
Cecilia Malmstrom, the E.U.’s trade commissioner, acknowledged that the E.U. had targeted some iconic American imports for tariffs, like Harley-Davidson motorcycles and bourbon, to “make noise” and put pressure on U.S. leaders.
John Murphy, a senior vicepresident at the U.S. Chamber of Commerce, estimates that $75 billion in U.S. products will be subject to new foreign tariffs by the end of the first week of July.
Trump ran for the presidency on a vow to topple seven decades of American policy that had favoured ever-freer trade among nations. He charged that a succession of poorly negotiated accords — including the North American Free Trade Agreement and the pact that admitted China into the World Trade Organization — put American manufacturers at an unfair disadvantage and destroyed millions of U.S. factory jobs.
He pledged to impose tariffs on imports from countries that Trump said had exploited the United States. Late last month, Trump proceeded to infuriate U.S. allies — from the E.U. to Canada and Mexico — by imposing tariffs of 25 per cent on imported steel and 10 per cent on aluminum. The president justified the move by saying imported metals threatened America’s national security — a dubious justification that countries have used rarely because it can be so easily abused.
The tariffs and threats have begun to take a toll.
Economists and trade analysts worry that there may be no way out of an all-out trade war between the United States and its most vital trading partners.