TARIFF TIFF
Actions targeted against allies draw retaliation threats
WASHINGTON — The Trump administration delivered a gut punch to America’s closest allies Thursday, imposing tariffs on steel and aluminum from Europe, Mexico and Canada in a move that drew immediate vows of retaliation.
Stock prices slumped amid fears of a trade war, with the Dow Jones industrial average falling nearly 252 points, or 1 percent, to 24,415.84.
The import duties threaten to drive up prices for American consumers and companies and are likely to heighten uncertainty for businesses and investors around the globe.
Commerce Secretary Wilbur Ross said the tariffs — 25 percent on imported steel, 10 percent on aluminum — would take effect today.
President Donald Trump originally imposed the tariffs in March, saying a reliance on imported metals threatened national security. But he exempted Canada, Mexico and the European Union to buy time for negotiations — a reprieve set to expire at midnight Thursday.
Other countries, including Japan, America’s closest ally in Asia, are already paying the tariffs.
The administration’s actions drew fire from Europe, Canada and Mexico and promises to quickly retaliate against U.S. exports.
“This is protectionism, pure and simple,” said JeanClaude Juncker, president of the European Commission.
French President Emmanuel Macron called the U.S. decision to levy tariffs on the European Union “illegal” and a “mistake.” He ominously recalled the pre-World War II period saying, “Economic nationalism leads to war. This is exactly what happened in the 1930s.”
The EU earlier threatened to counterpunch by targeting U.S. products, including Kentucky bourbon, blue jeans and motorcycles. David O’Sullivan, the EU’s ambassador in Washington, said the retaliation probably will be announced in late June.
Mexico complained that the tariffs will “distort international trade” and said it will penalize U.S. imports including pork, apples, grapes, cheeses and flat steel.
In Canada, Prime Minister Justin Trudeau said: “These tariffs are totally unacceptable.” Canada announced plans to slap tariffs on $12.8 billion worth of U.S. products, ranging from steel to yogurt and toilet paper.
“Canada is a secure supplier of aluminum and steel to the U.S. defense industry, putting aluminum in American planes and steel in American tanks,” Trudeau said. “That Canada could be considered a national security threat to the United States is inconceivable.”
Tennessee’s U.S. Sen. Bob Corker, chairman of the Senate Foreign Relations Committee, denounced the plan Thursday.
“Imposing steel and aluminum tariffs on our most important trading partners is the wrong approach and represents an abuse of authority intended only for national security purposes,” the Republican said in a statement. “If we truly want to level the playing field for American companies, we should be working with our friends and allies to target those actually responsible for tipping markets in their favor.”
U.S. Sen. Lamar Alexander, R-Tenn., also called the plan a “big mistake.”
“These tariffs will raise prices and destroy manufacturing jobs, especially auto jobs, which are one- third of all Tennessee manufacturing jobs,” he warned in a statement Thursday. “I have urged President Trump to focus on reciprocity — do for our country what our country does for you — instead of imposing tariffs, which are basically higher taxes on American consumers.”
Volkswagen, which has its only U.S.-based auto assembly plant in Chattanooga, said in a statement the German manufacturer noted “with regret and concern” the U.S.’s planned action to impose a 25 percent tariff on imports of EU steel and 10 percent on aluminum.
“There are fears that this marks the start of a negative spiral of measures and countermeasures where there will ultimately be no winners,” the statements read.
Given that, the company said, political dialogue between the U.S. and the European Union within recognized World Trade Organization trading principles “should be continued and intensified in order to prevent any longterm economic damage.
“Any escalation is harmful to both sides,” VW warned.
In addition to Volkswagen, Nissan has an auto assembly plant in Smyrna and its North American headquarters is in Franklin. General Motors, meanwhile, has a plant in Spring Hill.
The state now has more than 135,000 workers in the automotive industry, including suppliers, in 917 locations, blanketing 88 of the state’s 95 counties, according to the state Department of Economic and Community Development’s website.
In 2016 alone, workers here produced 832,600 cars, light trucks and SUVs, according to the Tennessee Department of Economic and Community Development. The department says that in 2016, the 832,800 vehicles made in Tennessee accounted for 6.7 percent of all U.S.made cars, light trucks and SUVs. Last year, Tennessee automotive exports hit $5.8 billion. Transportation equipment is the state’s top export, accounting for 22.8 percent of the state’s total exports.
Trump had campaigned for president on a promise to crack down on trading partners that he said exploited poorly negotiated trade agreements to run up big trade surpluses with the U.S.
The U.S. tariffs coincide with — and could complicate — the Trump administration’s separate fight over Beijing’s strong-arm tactics to overtake U.S. technological supremacy. Commerce Secretary Ross is leaving today for Beijing for talks aimed at preventing a trade war with China.
The world’s two biggest economies have threatened to impose tariffs on up to $200 billion worth of each other’s products.
The steel and aluminum tariffs could also complicate the administration’s efforts to renegotiate the North American Free Trade Agreement with Canada and Mexico, a pact Trump has condemned as a job-killing “disaster.”
Trump offered the two U.S. neighbors a permanent exemption from the steel and aluminum tariffs if they agreed to U.S. demands on NAFTA. But the NAFTA talks stalled.
Ross said that there was “no longer a very precise date when they may be concluded,” and that as a result, Canada and Mexico were added to the list of countries hit with tariffs.
Likewise, the Trump trade team sought to use the tariff threat to pressure Europe into reducing barriers to U.S. products. But the two sides could not reach an agreement.
The import duties will give a boost to American makers of steel and aluminum by making foreign metals more expensive. But companies in the U.S. that use imported steel will face higher costs.