Blue jeans trade war

Trump’s tar­iff plan sparks threat of re­tal­i­a­tion on US favourites

The Sunday Telegraph (Sydney) - - WORLD -

HIS plan to put tar­iffs on steel and alu­minium im­ports has trig­gered global crit­i­cism and a slide in world stock mar­kets but US Pres­i­dent Don­ald Trump re­mains de­fi­ant, declar­ing trade wars were “good and easy to win”.

The Amer­i­can leader said his plan for tar­iffs of 25 per cent on steel im­ports and 10 per cent on alu­minium prod­ucts was de­signed to safe­guard Amer­i­can jobs in the face of cheaper for­eign prod­ucts and would be for­mally an­nounced next week.

The move pro­voked an im­me­di­ate re­ac­tion from around the world. The Euro­pean Union raised the pos­si­bil­ity of tak­ing coun­ter­mea­sures to tar­get the US, France said the du­ties would be un­ac­cept­able and China urged Mr Trump to show re­straint. Canada, the big­gest sup­plier of steel and alu­min- ium to the US, said it would also re­tal­i­ate if hit by US tar­iffs.

US stocks opened sharply lower on Fri­day as in­vestors fret­ted about a po­ten­tial global trade war. How­ever, Mr Trump did not back down.

“When a coun­try (USA) is los­ing many bil­lions of dol­lars on trade with vir­tu­ally ev­ery coun­try it does busi­ness with, trade wars are good, and easy to win,” he tweeted.

“Ex­am­ple, when we are down $100 bil­lion with a cer- tain coun­try and they get cute, don’t trade any­more — we win big. It’s easy!” he wrote.

It was not clear which coun­try he was re­fer­ring to.

The prospect of re­tal­i­a­tion from Canada, China and Europe sent world stocks tum­bling to­wards a 2.5 per cent weekly loss as in­vestors turned to tra­di­tional safe havens such as gov­ern­ment bonds, gold and the Ja­panese yen.

“It is a real worry be­cause Europe is an open global econ- omy so it isn’t just about US ver­sus China,” Ian Or­mis­ton, from Old Mu­tual Global In­vestors, said. “And we will see re­tal­i­a­tion, there are no two ways about it.”

The Euro­pean Com­mis­sion, the EU’s ex­ec­u­tive, called the US tar­iffs a bla­tant in­ter­ven­tion that amounted to pro­tec­tion­ism and promised to act “firmly” in re­sponse.

Euro­pean Com­mis­sion pres­i­dent Jean-Claude Juncker said the 28 coun­tries in the EU could re­spond by tax­ing goods that are core to the Amer­i­can iden­tity such as bour­bon whiskey, blue jeans and Harley-David­son mo­tor­cy­cles. “I don’t like us­ing the word trade war, but I can’t see how this isn’t part of war­like be­hav­iour,” he said.

Roberto Azevedo, the di­rec­tor-gen­eral of the World Trade Or­gan­i­sa­tion, warned a “trade war is in no one’s in­ter­ests”.

Even Mr Trump’s fel­low Repub­li­cans urged cau­tion.

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