Trump has ignited a global trade war

Chan Tak-leung says the US president’s heavy tariffs are likely to ensure he receives an even more frosty welcome when paying his first official visit to the UK

Donald Trump is embarking on a three-day visit to the United Kingdom this month — his first as president of the United States. The itinerary more or less gives London a miss for one very good reason — the US ambassador in London and White House staff know full well that should the president turn up in London, he will be met with mass opposition and unwelcome demonstrations against his very presence. There are just too many detractors who are equally dismayed with and angered by his impertinent behavior and erratic policies since assuming office.

His presence will certainly result in a large crosssection of UK citizens, from the mayor of London to parliamentarians as well as a significant number of Londoners — hating the sight of the president in their city.

To add insult to injury, the new tariffs which Trump initiated under his “America First” banner are now in place. This policy, through which the president set out initially to target trade deficits between the US and China, now affects other nations — ranging from Canada and Mexico to the UK and other nations within the European Union — and brings negative results to some US industries and manufacturers as well.

Harley-Davidson, the motorcycle manufacturer, is one such example. The US company’s shares have dropped since the president’s announcement and the firm now plans to take this most iconic American product to the other side of the Atlantic. With the World Cup going on at the moment, one would definitely think it appropriate to call this an “own goal”.

Equally unhappy with the newly imposed tariffs of 25 percent on steel and 10 percent on aluminum exports respectively is none other than Justin Trudeau, Canada’s prime minister, who blasted the US president by stating that the tariffs he introduced are “totally unacceptable” and it is groundless for the US to believe there is a need to impose the levies on grounds of “national security”.

Since the beginning of last month, the world’s currency markets have witnessed the Mexican peso, Canadian dollar and euro weakening against the US dollar.

The UK is the United States’ fifth-largest export partner and seventh-largest import partner, and Prime Minister Theresa May was the very first head of government to visit Trump at the White House, so one would have thought that perhaps British exports to the US will not be affected by the new tariffs. Wrong.

The new tariffs of 25 percent will also apply to UK goods exported to the US including cars, packaged medicines, nucleic acids and refined petroleum. A member of parliament representing a constituency with Britain’s largest steel works claimed that Trump’s scattergun decision to impose steel tariffs on US’ closest allies would be “utterly self-defeating”. Britain’s international trade minister, at the same time, lambasted the US action as “patently absurd”.

Last year, import and export trade between the US and Europe amounted to $501 billion and $593 billion, respectively. Among exports, cars from Germany accounted to $20.2 billion and the new tariffs are obviously a major concern for Angela Merkel, the German chancellor.

European business interests unanimously condemned the Trump administration for causing havoc and uncertainty with its new tariff policy. The EU has already lodged a dispute settlement case with the World Trade Organization, stating the US claims that tariffs were needed for national security were unjustified and no more than “pure protectionism”. The EU is also considering additional duties of 25 percent on goods from the US, including denim jeans, motorcycles, cigarettes, cranberry juice, peanut butter and so on as retaliatory measures.

The EU and other nations might still consider the new tariffs imposed by the US as “illegal”, “pure protectionism” and not a trade war, but if one takes its hefty and punitive tariffs on China’s exports and imports into consideration as well as the likely global impact, one can say with certainty that Trump has without a doubt set alight a global trade war — both in name and in act. World leaders must act decisively and swiftly to ensure international relations and free trade are restored without any delays.