Trump risks global trade war as he threatens to pull out of WTO

DONALD TRUMP has ratcheted up the risk of a global trade war, saying the US could pull out of the World Trade Organisation, while rejecting an EU offer to cut tariffs on cars.

The US president said America was being treated badly by WTO rules, adding that if the trade body “does not shape up, I could withdraw”. Mr Trump has been highly critical of the WTO in the past, saying it “needs to change its ways”. US trade officials say the decision to admit China in 2001 was a mistake because the WTO system cannot work with a non-market economy.

Mr Trump withdrawing the US could prove more serious to the global economy than its simmering trade dispute with China. This has involved tens of billions of dollars in tariffs being imposed in tit-for-tat moves on imports, with the US most recently threatening to slap another $200bn (£154bn) of levies on products arriving from China.

Further upping the rhetoric, Mr Trump told Bloomberg that the US would outlast China in a full-blown trade war. “We are a much stronger country,” he said. “Nobody’s waiting us out. Our country is stronger than it has ever been financially.” In the past, Mr Trump has taken to Twitter to accuse China and the EU of “manipulating their currencies and interest rates lower” to boost their economies at the expense of the US.

He renewed his attack on China saying the Beijing government was “trying to make up for lack of business by cutting their currency”. He added: “It’s no good. They can’t do that.”

In the same interview, Mr Trump labelled the EU’S trade policies as “almost as bad as China”, and spurned a potential deal negotiated in July that would see the end of import tariffs on cars between the US and Europe, calling the terms “not good enough”.

The European Commission president Jean-claude Juncker this summer said a “ceasefire” deal had been agreed while ways of lowering levies and boosting free trade could be thrashed out. But he added this week that the EU would not let anyone determine its trade policies and would respond in kind if Washington decided to impose tariffs on vehicles after all.

Markets fell on the news, with car makers on both sides of the Atlantic hit hardest. The dollar strengthened against sterling, the euro and the yuan as traders digested Mr Trump’s words yesterday.