Mexico, EU to retaliate over US tariffs
THE TRUMP administration announced on Thursday it will impose tariffs on steel and aluminium imports from Europe, Mexico and Canada after failing to win concessions from the American allies.
Europe and Mexico pledged to retaliate quickly, and Canada vowed to respond appropriately, exacerbating trans-Atlantic and North American trade tensions.
US Commerce Secretary Wilbur Ross said the tariffs, 25 per cent on steel and 10 per cent on aluminium, would take effect today, Friday, as the administration followed through on the penalties after earlier granting exemptions to buy time for negotiations. President Donald Trump had announced the tariffs in March, citing national security concerns.
The European Commission’s president, Jean-Claude Juncker, said Trump’s decision amounted to trade protectionism and that Europe would respond with countermeasures. Mexico said it would penalise US imports, including pork bellies, apples, grapes, cheeses and flat steel.
The trade actions have opened the US to criticism that it’s burning bridges at a time when Trump is seeking to rid North Korea of nuclear weapons and help stabilise the Middle East.
“We are alienating all of our friends and partners at a time when we could really use their support,” said Wendy Cutler, a former US trade negotiator who is now vice-president at the Asia Society Policy Institute.
Ross told reporters that talks with Canada and Mexico over revising the North American Free Trade Agreement were “taking longer than we had hoped”. Talks with Europe had “made some progress” but not enough for additional exemptions, he said in a conference call from Paris.
“We continue to be quite willing and indeed eager to have further discussions,” Ross said. He was bound for China on Friday for trade talks between the world’s two biggest economies.
European officials had braced for the tariffs and the EU has threatened to retaliate against US orange juice, peanut butter and other goods in return. In terms of the NAFTA talks, the tariffs could hinder the negotiations among the North American neighbours.
On NAFTA, Ross said there was “no longer a very precise date when they may be concluded and therefore (Canada and Mexico) were added into the list of those who will bear tariffs.”
Brazil, Argentina and Australia have agreed to limit steel shipments to the US in exchange for being spared the tariffs, the US Commerce Department said. Tariffs will remain on imports from Japan.
Fears of a global trade war are already weighing on investor confidence and could hinder the global economic upturn. European officials argue that titfor-tat tariffs will hurt growth on both sides of the Atlantic and Canada said before the announcement that it would respond in kind.
“Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States,” Canadian Foreign Minister Chrystia Freeland said before the tariffs were announced. “The government is absolutely prepared to and will to defend Canadian industries and Canadian jobs. We will respond appropriately.”
German Chancellor Angela Merkel stressed her opposition even before the US announcement, saying the looming tariffs were incompatible with World Trade Organization rules. She said if there were no exemptions, “we will respond in an intelligent, decisive and joint way”.
Tariffs on steel and aluminium imports to the US can help local producers of the metals by making foreign products more expensive. But they can increase costs more broadly for US manufacturers that cannot source all their needs locally and have to import the materials. That hurts the companies and can lead to more expensive consumer prices, economists say.
Besides the steel and aluminium tariffs, the US is also investigating possible limits on foreign cars in the name of national security.
Ross criticised the EU for its tough negotiating position. But German Economy Minister Peter Altmaier insisted the Europeans were ready to negotiate special trade arrangements, notably for liquefied natural gas and industrial goods, including cars.