Seething allies pledge swift retaliation over Trump’s tariffs

A global trade war has erupted as America’s allies pledge sweeping retaliatory tariffs against the US.

Canadian Prime Minister Justin Trudeau: ‘Canada has been America’s most steadfast ally’. Picture: AP

A global trade war has erupted as America’s allies pledge sweeping tariffs against the US in retaliation against Donald Trump’s refusal to spare them from steel and aluminium tariffs.

In a day of high drama that ­rattled world markets, the Trump administration provoked fury yesterday by refusing to exempt key trading partners Canada, Mexico and Europe from its new tariff regime.

Australia, Argen­tina and Brazil, were the only ­exemptions from tariffs of 25 per cent on steel and 10 per cent on aluminium.

The US decision provoked a furious response. Canada, Mexico and the EU promised swift and broad retaliation.

Canadian Prime Minister Justin Trudeau said: “These tariffs are totally unacceptable. For 150 years, Canada has been America’s most steadfast ally.”

He said Canada would retaliate by imposing levies on US imports worth about $US12.8 billion ($17bn), the same value as the steel and aluminium exports that would be hit by the US tariffs.

EU trade commissioner ­Cecilia Malmstrom said: “Today is a bad day for world trade. Throughout these talks, the US has sought to use the threat of trade restrictions as leverage to obtain concessions from the EU. This is not the way we do business, and certainly not between longstanding friends and ­allies.’’

European Commission president Jean-Claude Juncker said: “This is protectionism, pure and simple. We will defend the commission’s interests, in compliance with international trade law.”

The EU said it would retaliate by imposing tariffs on “a number’’ of US products worth about $US3.3bn. Mexico also said it would slap tariffs on a range of US ­imports.

The EU had previously threatened to impose retaliatory tariffs against US products including peanut butter, Kentucky bourbon, Harley-Davidson motorbikes and clothing, footwear and textiles, among other goods.

The EU also said it would launch a case against the US tariffs at the WTO.

Mr Trump formally announced yesterday that Australia, Brazil and Argentina would be spared. The EU, Canada and Mexico had hoped they would also be exempted from the tariffs after the Trump administration delayed their implementation to discuss possible exemptions.

But in a statement, the White House said the US was “unable to reach satisfactory arrangements with Canada, Mexico or the EU, after repeatedly delaying tariffs to allow more time for discussions’’. The tariffs bite from today.

After the announcement, Mr Trump tweeted: “FAIR TRADE.”

The Trump administration ­initially announced the tariffs to target China, which has flooded the global steel market through oversupply. But China is the 11th-largest importer of steel into the US, so the largest importers, such as Canada, Mexico and the EU, have been hit the hardest.

Mr Trump has justified the tariffs on the ground of national ­security, saying the US cannot ­afford to jeopardise its steel and aluminium industries in case of future conflict.

The White House yesterday said: “Steel and aluminium tariffs have already had major, positive effects on steel and aluminium workers and jobs and will continue to do so into the future.”

Commerce Secretary Wilbur Ross said Mr Trump saw steel and aluminium imports as a direct threat to security.

“Without a strong economy, you can’t have a strong national security,” he said.

Allies such as Canada have said it is absurd to claim steel imports from such close allies will undermine US national security.

Ontario Premier Kathleen Wynne said: “Donald Trump is a bully. And the only way to do deal with a bully is to stand up and push back.’’

Mexico announced immediately that it would impose tariffs on US imports of apples, grapes, cheese, pork bellies and flat steel.

A spokesman for the British government said: “We are deeply disappointed that the US has decided to apply tariffs to steel and aluminium imports from the EU on national security grounds.”

The decision comes at a time when the Trump administration is seeking to renegotiate its trade deal with Canada and Mexico.

Critics say the tariffs decision will hurt US farmers and businesses by provoking ­retaliatory action that will damage access to foreign ­markets.

The tariffs also drew criticism from some senior Republicans.

“This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” said Republican senator Ben Sasse. “We’ve been down this road before. Blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.”

Cameron Stewart is also US contributor for Sky News Australia.

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Escalating trade tensions

MARCH 1, 2018
US President Donald Trump, who made correcting the US trade deficit a priority, announces heavy tariffs on steel and aluminium imports. EU responds with hit list of flagship American products it could tax, including Harley-Davidson motorbikes, blue jeans, bourbon whiskey and peanut butter.

MARCH 8
Trump announces tariffs of 25 per cent on steel products and 10 per cent on aluminium from March 23. The President brushes aside warnings from allies on the risks of unpredictable trade war. Trump bases move on rarely used US trade legislation procedure, article 232, which allows a limit on certain imports to protect national security.
MARCH 22
On eve of tariffs coming into force, Trump suspends them to May 1 for the European Union. Also, Australia, Argentina, Brazil, and South Korea are exempted. Canada and Mexico spared as they are part of the North American Free-Trade Agreement trade bloc. China not exempted, announces tit-for-tat tariffs, slapping duties on US cars.

APRIL 16
EU follows China in complaining to the World Trade Organisation over the tariffs and calls for “safeguards” since it has a substantial interest in the case. Two days later, EU Trade Commissioner Cecilia Malmstrom calls for the bloc to be excluded from tariffs. Says otherwise EU will not negotiate with US on trade.
APRIL 26
US National Economic Council director Larry Kudlow says exemptions cannot be extended beyond May 1 unless EU makes some trade and tariff concessions. French Economy Minister Bruno Le Maire says it is not up to Europe to make concessions.

APRIL 29
Leaders of EU’s three largest economies, Britain, France and Germany, agree on need to be “ready to react” with efficiency and speed to tariffs.

MAY 1
US says it will extend for 30 days the exemptions from punishing metals tariffs for Canada, Mexico and EU. EU expresses disappointment, saying decision would “prolong uncertainty”. Calls for a permanent exemption.
MAY 8
Trump withdraws from Iran nuclear deal. Threatens sanctions on foreign companies trading with Iran. Ten days later, EU tells the WTO it is ready with retaliatory measures against US tariffs on steel and aluminium, including European tariffs on motorbikes and bourbon.

MAY 23
White House announces it is considering possible tariffs on car imports, causing dismay in EU, notably among German carmakers.

MAY 31
US says it will impose tough tariffs on steel and aluminium imports coming from the EU, Canada, Mexico, prompting threats of retaliation by angry allies and trading partners.