Blue jeans trade war
Trump’s tariff plan sparks threat of retaliation on US favourites
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.