Published: Thu, May 31, 2018
Money | By Arnold Ball

Steel and aluminum tariffs to apply to EU, Mexico, Canada

Steel and aluminum tariffs to apply to EU, Mexico, Canada

The tariffs, which take effect from midnight on Friday, will end a two-month exemption for the key United States allies.

Trade tensions between the European Union and the United States ran high Thursday as the clock was ticking for USA steel and aluminium tariffs against European producers to kick in.

"Global trade is not a gunfight at the OK Corral", France's finance minister quipped after meeting US Commerce Secretary Wilbur Ross, as reported by PTI.

"We are alienating all of our friends and partners at a time when we could really use their support", said Wendy Cutler, a former USA trade negotiator who is now vice-president at the Asia Society Policy Institute. But nobody knows for sure, and the fear is that the U.S. action will damage business confidence at a time when growth is slowing.

The US has an approximately $38bn trade in goods deficit with the European Union, with about $78bn exported to Europe from the US, and $116bn going the other way. They are expected to lead to retaliation from European nations. "At the same time, the Trump Administration's actions underscore its commitment to good-faith negotiations with our allies to enhance our national security while supporting American workers", she continued. Virtually no one believes that the national-security argument holds water, and Canadian foreign minister Chrystia Freeland mocked it in remarks to reporters Wednesday.

German Chancellor Angela Merkel said the European Union response will be "intelligent, decisive and joint", adding that the tariffs are incompatible with WTO rules.

Alongside motorcycles, the EU has said it could slap additional tariffs on orange juice, whiskey and Levi's jeans, which would hit United States exporters and push up the cost of imports for European shoppers.

The head of the Aluminum Association of Canada says the 10 per cent tariffs to be imposed Friday on his industry will cause the most harm to Americans who will face higher prices for goods made from the metals, but could also damage smaller Canadian suppliers.

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It didn't take long for the European Union, Canada, and Mexico to hit back at the United States after the Trump administration announced the three key allies would soon be subject to steel and aluminum tariffs. "There is no longer a very precise date when they may be concluded" so they were added to the tariff list, he said.

This is dumb. Europe, Canada, and Mexico are not China, and you don't treat allies the same way you treat opponents.

The European Commission tweeted that the tariffs represented "protectionism, pure and simple".

He reiterated the USA concerns over the indirect flow of cheap Chinese steel into the US through other countries.

Europe did not want a trade war, he said, but Washington had to back down from "unjustified, unjustifiable and risky tariffs".

Trump announced worldwide steel and aluminum tariffs in March but granted exemptions to some major trading partners.

This marks a big step closer to a global trade war.

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