‘The President has it some countries should be out’
Donald Trump has decided on an exemption for US allies, including the UK and EU, from the recently announced, China-targeted steel tariffs. Andrew Buncombe reports
President Donald Trump has decided to exempt the EU and other allies from the recently announced steel and aluminium tariffs, a senior official has revealed.
US trade representative Robert Lighthizer told politicians on Capitol Hill that the EU, along with Argentina, Australia, Brazil and South Korea, would not be subject to the levies. Earlier, the US had announced that Canada and Mexico would also not be subject to them while negotiations continued.
“The idea that the President has is that, based on a certain set of criteria, some countries should be out,” Mr Lighthizer told the Senate Finance Committee. “What he has decided to do, is pause the implementation of the tariffs in respect to those countries.”
Earlier this month, Mr Trump announced plans to impose tariffs of 25 per cent on imported steel and 10 per cent on aluminium – trade penalties aimed at China for flooding the world with cheap metals. He responded to claims he was set to trigger a trade war by saying he would welcome one as he believed it
would be good for the country.
After many nations complained vociferously, Mr Lighthizer said there were several countries involved in various stages of trade talks with the US, and that Mr Trump had decided “to pause the imposition of tariffs with respect to those countries”.
The EU’s trade chief Cecilia Malmstrom, who returned yesterday from a trip to the US, said that she expected the bloc to be exempt. “We have argued, and I think successfully, that the European Union is not an enemy of the US when it comes to steel and aluminium,” Ms Malmstrom said in her account of the visit. “Hopefully, that will lead to us being excluded from the measures.”
The European Commission has threatened the US with retaliatory measures targeted against Bourbon whiskey, Harley Davidson motorcycles and Levis jeans if the steel and aluminium tariffs go ahead. Exempting the EU would be a significant climbdown for the US President, who said in recent weeks that trade wars were “good, and easy to win”. He has previously hit out at what he called Europe’s “very unfair” trade policies towards the United States.
Mr Lighthizer also cited Canada and Mexico in his list. The US is in consultations with the two countries in an effort to renegotiate the North American Free Trade Agreement (Nafta).
He identified the countries initially exempted from the tariffs in response to a question from Democratic Senator Ron Wyden, who said politicians wanted more consultation from the administration on trade.
“Which countries – this is going to happen tomorrow – will not have these steel and aluminium tariffs applied to them?” Mr Wyden said.
“The list I just gave,” Mr Lighthizer said.
Before Mr Lighthizer’s testimony, Germany’s economy minister, Peter Altmaier, said he had found officials in Washington “open to our arguments” during the recent visit with Ms Malmstrom. Mr Altmaier told Germany’s parliament “it is a question of fundamental significance: whether we all stand for open and fair world markets in the future”.
Trump campaigned on promises to bring down America’s trade deficit, which stood at $566bn (£401bn) last year, by rewriting trade agreements and cracking down on what he called abusive commercial practices by America’s trading partners. Mr Lighthizer said the nation’s trade deficit indicated that global rules on trade sometimes made it hard for US companies to export. “We are negotiating trade deals that will work for Americans,” he said.
However, the comments from Mr Lighthizer will do little to calm fears of the potential for a global trade war, given that they came on the same day as Mr Trump announcing up to $60bn of tariffs against China. While the move to seemingly target China rather than staunch US allies will come as a relief to EU diplomats, it is likely to bring a reaction from Beijing. Just before signing the trade action, Mr Trump said it was “the first of many”.
Under the terms of the memorandum Mr Trump signed, he will target the Chinese imports only after a consultation period, thereby giving industry lobbyists and members of Congress a chance to water down a list of proposed 1,300 products that could be targeted.
The consultation period will also give China time to respond, reducing the risk of immediate revenge from Beijing. The Chinese government has vowed to take “all necessary measures” to defend the country’s interests if Mr Trump attacks it for allegedly stealing American technology or pressuring US companies to hand it over.
“China will not sit idly to see its legitimate rights damaged, and must take all necessary measures to
resolutely defend its legitimate rights,” the Commerce Ministry in Beijing said in a statement on its website.
Mr Trump struck a conciliatory tone when he first began speaking at the White House’s signing ceremony, calling China “a friend” and saying he had “tremendous respect” for Chinese President Xi Jinping. “We have spoken to China and we are in the middle of negotiations,” Mr Trump said, adding that the loss of American jobs from unfair trade was one of the main reasons he had been elected as President.
He again lamented over “unfair” trade deals and the US’s trade deficits with other countries, saying he had asked China to immediately reduce its trade surplus with America by $100bn.
The President’s action was made under Section 301 of the 1974 Trade Act, which gives Mr Trump broad authority to respond to a foreign country’s unfair trade practices. An investigation identified theft from and coercion of US companies to disclose their intellectual property, as well as purchases by Chinese state funds of American companies for their technology knowledge.
Ahead of the trade announcement, White House officials said the administration was looking at tariffs on $50bn worth of Chinese goods, a figure based on a calculation of the impact on the profits of US companies that had been forced to hand over their intellectual property as the price of doing business in China. There was no explanation of the difference between the numbers provided by White House officials in the briefing and Trump’s $60bn.
“Many of these areas are those where China has sought to acquire advantage through the unfair acquisition and forced technology transfer from US companies ... establishing its own competitive advantage in an unfair manner,” Everett Eissenstat, deputy director of the National Economic Council, told reporters.
During his remarks, Mr Trump also slammed the World Trade Organisation, saying it has been a disaster for the US and arbitration has been very unfair.
Last night the Dow Jones Industrial Average closed down more than 700 points, with investors fearing that trade tensions will spike between the US and China.
Industrial and technology companies, which depend heavily on foreign trade, took some of the worst losses with Boeing, Caterpillar and Microsoft all falling sharply. The Dow sank 724 points, or 2.9 per cent, to 23,957. The Nasdaq lost 178 points, or 2.4 percent, to 7,166.
The S&P 500 index dropped 68 points, or 2.5 per cent, to 2,643, erasing its gain for the year. It is the fifthworst daily point drop ever for the Dow and the worst since the beginning of February.