Trump steel tariffs raise fear of trade war
Allies decry move, suggest retaliation against U.S. goods
WASHINGTON — President Donald Trump’s plan to slap taxes on steel and aluminum imports was branded Friday as “absolutely unacceptable” by Prime Minister Justin Trudeau of Canada, the United States’ biggest foreign source of both metals.
Trump hasn’t sparked a trade war — yet. But when Trump announced Thursday he was imposing a 25 percent tariff on steel and 10 percent tariff on aluminum on national security grounds, he set into motion the possibility that trading partners would fight back with tariffs of their own.
The rebukes delivered on Friday suggested that some countries were prepared to retaliate if necessary.
Trudeau stressed in his comments he was prepared to “defend Canadian industry” and that the tariffs would also hurt U.S. consumers and businesses because prices could rise.
The 28 countries in the European Union could respond by taxing goods that are core to the American identity such as bourbon whiskey, blue jeans and Harley Davidson motorcycles, said Jean-Claude Juncker, president of the European Commission.
“I don’t like using the word trade war, but I can’t see how this isn’t part of warlike behavior,” Juncker told German media.
Roberto Azevedo, the director-general of the World Trade Organization, warned that a “trade war is in no one’s interests.”
China — the world’s largest steel producer and Trump’s primary target — stayed quiet about how it would respond.
Trump’s fellow Republicans urged caution. Doug Andres, an aide for House Speaker Paul Ryan, said Ryan “is hoping the president will consider the unintended consequences of this idea.”
Trump views the tariffs as a way to pressure trading partners into submission and wipe away the long-standing trade deficit.
“Trade wars are good, and easy to win,” he said on Twitter.
Commerce Secretary Wilbur Ross downplayed the risk of rising prices from the steel and aluminum tariffs.
Joseph Brusuelas, chief economist at the consultant RSM, sees three possible stages in any trade war.
There could be a “lite” trade war in which partners challenge the tariffs in WTO courts and retaliate with their own targeted import taxes. The next step could involve a broader array of tariffs that seek to penalize large U.S. banks and leading technology firms. And, then, “if that spins out of control,” there could be a breakdown in trade agreements, the creation of non-tariff barriers and limits to the flow of money among countries.
Yet simply by pinning his tariffs on national security — despite indications that steel and aluminum imports aren’t a risk for the U.S. military — Trump may have already started to unravel the rules that hold the global trading system together, said Philip Levy, a trade adviser to George W. Bush.