Trump steel, aluminium tariffs cause global jitters
Major producers’ retaliation could lead to trade war
THE Trump administration’s plan to place tariffs on steel and aluminium sparked an outcry among major producing nations and stock market plunges yesterday, fuelling fears of an imminent tit-for-tat trade war.
After weeks of rumour and counter-rumour about his administration’s intentions, President Donald Trump on Thursday announced he would sign off on measures designed to protect US producers “next week”.
The tariffs – 25% on steel and 10% 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.
It also caused jitters across global stock markets. The benchmark Dow Jones Industrial Average lost as much as 2.3% on Thursday and Asian markets quickly followed suit. Tokyo, Hong Kong, Sydney and Seoul were all sharply down yesterday afternoon with many major industrial giants hit particularly hard.
European Commission chief Jean-Claude Juncker led criticism of Washington, saying 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.
Canadian Trade Minister Francois-Philippe Champagne responded even more bluntly.
“Any tariffs or quotas that would be imposed on our Canadian steel and aluminium industry would be unacceptable,” Champagne told parliament. “Any such decision would have an impact on both sides of the border.”
Australia’s 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 it does not export particularly large quantities of steel and aluminium to the US.
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.
China has previously warned it was ready with countermeasures should the Trump administration deploy tariffs but there was no official response from Beijing by early yesterday afternoon.
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.
Sources familiar with Trump’s decision say he faced stern opposition from aides, including top economic adviser Gary Cohn, who argued the move could ultimately damage US industry.