Essay

U.S. Tariffs Prompt Anger, Retaliation From Trade Allies; Canada, Mexico and the European Union promise to issue their own levies on U.S. goods, increasing chances of a trade war Mauldin, William . Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]01 June 2018: n/a.

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FULL TEXT WASHINGTON--The Trump administration raised the prospect of a global trade war by imposing tariffs on imports

from the closest U.S. neighbors and allies, who swiftly pledged to retaliate with duties of their own.

President Donald Trump is pursuing an aggressive strategy to win economic concessions from neighbors and

allies in an effort to cut the U.S. deficit in merchandise trade.

The new tariffs--on steel and aluminum imports from Canada, Mexico and the European Union--come as the U.S. is

studying global levies on autos and auto parts. The administration also plans tariffs on industrial supplies from

China. Beijing has promised to retaliate with its own duties.

Financial markets fell early on Thursday before partly recovering later, with the Dow Jones Industrial Average

closing down 1% to 24415.84.

The move follows months of U.S. threats to impose tariffs, part of a push to negotiate new trade terms. The Trump

administration is negotiating with virtually all of its major trading partners around the globe, including with Mexico

and Canada over the North American Free Trade Agreement.

Those initiatives have generally failed to bring the large, quick victories Mr. Trump has promised.

Administration officials said they were still open to deals to drop the metals tariffs. "We continue to be quite willing

and indeed eager to have further discussions with all of those parties," Commerce Secretary Wilbur Ross told

reporters Thursday.

The reaction from allies was swift and severe. Canadian Prime Minister Justin Trudeau said his government would

impose a 25% tariff on steel imports from the U.S. and a 10% tariff on aluminum and a wide range of other U.S.

goods, including some food and agricultural products. Ottawa said it would hold consultations for two weeks

before imposing the tariffs on July 1.

Mexico's Economy Ministry said it would target a number of U.S. goods, including some steel and pipe products,

lamps, berries, grapes, apples, cold cuts, pork chops and various cheese products "up to an amount comparable to

the level of damage" linked to the U.S. tariffs.

The EU has said it is also planning to hit back with its own duties on U.S. exports worth [euro]6.4 billion ($7.5

billion), including on steel, motorcycles and some agricultural products. Up to [euro]2.8 billion of that could go into

effect starting June 20. The EU said it would also launch a case against U.S. measures at the World Trade

Organization on Friday.

"This is protectionism, pure and simple," the EU's top executive, European Commission President Jean-Claude

Juncker, said Thursday. "We will defend the Union's interests, in full compliance with international trade law."

Some participants in the U.S. steel industry, which Mr. Trump has vowed to protect, applauded the move. "The

president's trade actions have already begun putting steelworkers back to work in Ohio and Illinois," said Tom

Gibson, president of the American Iron and Steel Institute.

However, the United Steelworkers union, which includes Canadian members, broke with the Trump administration,

criticizing the tariffs.

Mr. Trump's "America first" economic message continues to appeal to a wide swath of voters, especially in the

industrial Midwest, which he credits for his victory in the 2016 presidential election.

"I've supported steel tariffs from the beginning, because China's cheating has cost too many Ohio steelworkers

their jobs," said Sen. Sherrod Brown (D., Ohio). "I'm open to carving out allies who are not part of the problem, but

steel overcapacity is a global problem that needs a global response."

Washington announced unilateral, global steel and aluminum tariffs in March, but Canada, Mexico and the

European Union, which includes the U.K., had been offered temporary exemptions to the duties. All three

economies received an extension a month ago. On Thursday, Mr. Ross told reporters the exemptions won't be

renewed, subjecting their metals exports to the tariffs.

The move capped a week of intensifying pressure on trading partners. On Tuesday, the White House revived a plan

it had previously suspended to place tariffs on $50 billion in industrial imports from China, and it is studying

whether tariffs should be imposed on imported cars and auto parts.

The Trump administration is citing national security to justify the tariffs, arguing that America's allies and rivals are

employing unfair trade policies to undermine the viability of critical U.S. industries, starting with steel and

aluminum. The administration says the national security justification comports with U.S. law and a special security

exception at the WTO.

On Thursday, the White House said the "steel and aluminum tariffs have already had major, positive effects on

steel and aluminum workers and jobs."

The policy risks higher prices on imports, painful retaliation against U.S. exports and longer-term strife with allies if

the Trump administration alienates politicians in allied democracies.

Republican lawmakers were quick to voice their disapproval. "This is dumb," said Sen. Ben Sasse, a Nebraska

Republican. "Europe, Canada, and Mexico are not China, and you don't treat allies the same way you treat

opponents."

Rep. Kevin Brady, the Republican chairman of the House committee that oversees trade, said the Trump

administration "will need to come to Capitol Hill to provide answers about the indiscriminate harm these tariffs are

causing our local businesses."

Sen. Orrin Hatch of Utah, chairman of the Senate Finance Committee, said: "Tariffs on steel and aluminum imports

are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers. I

will continue to push the administration to change course."

The countries hit by tariffs include some of the biggest suppliers of metals.

Canada accounts for about half of the raw aluminum imported by the U.S. and about 21% of the finished steel

imports by the U.S. It is a major provider of steel plate and hot-rolled coil steel used widely in manufacturing.

Mexico supplies 9% of finished steel imports and 11% of semifinished steel. These are generally big slabs of steel

that U.S. mills buy to make finished products like sheet steel and pipe.

EU countries provide 17% of the steel imported by the U.S. The EU is a major supplier of stainless steel, high-value

steel used by the automotive industry.

Canada Foreign Minister Chrystia Freeland said Ottawa was considering its strongest retaliatory action since

World War II, due to "a very bad U.S. decision."

Canadian officials made a last-ditch effort this week to get the exemption extended. Ms. Freeland visited U.S.

Trade Representative Robert Lighthizer to plead Ottawa's case, and Canada's government issued a new policy late

Wednesday to prevent the dumping of cheap foreign steel into North America.

Mr. Ross, who is leading the reviews of steel, aluminum and auto-industry imports, said countries aren't being

singled out as national-security threats but instead evaluated through a broader economic lens.

"The question is what is the overall impact of the overall global supply situation in steel and aluminum, relatively to

those industries, relative to national defense, and relative to the national economy," he said.

Mr. Ross said Agriculture Secretary Sonny Perdue is leading the administration's efforts to support farmers hurt by

any retaliatory duties or quotas. Mr. Trump has warned he may respond to retaliatory tariffs with barriers against

European cars.

"I think it's important for countries to retaliate," said Luis de la Calle, a former Mexican official who was part of the

original Nafta negotiating team. "If we don't do it now, it's only going to get worse with possible car tariffs."

Emre Peker in Brussels, Paul Vieira and Kim Mackrael in Ottawa, Santiago Perez in Mexico City and Bob Tita in

Pittsburgh contributed to this article.

Write to William Mauldin at [email protected]

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Credit: By William Mauldin DETAILS

Subject: North American Free Trade Agreement; Aluminum; Presidents; US exports; American

dollar; International trade; National security; Tariffs; Steel industry; Securities

markets; Trade relations; International relations-US

Location: Canada United Kingdom--UK Europe Mexico United States--US China

People: Trump, Donald J Juncker, Jean-Claude Brown, Sherrod Lighthizer, Robert Brady,

Kevin Perdue, Sonny Hatch, Orrin G Ross, Wilbur L Jr Trudeau, Justin Sasse, Ben

Company / organization: Name: Senate-Finance, Committee on; NAICS: 921120; Name: European

Commission; NAICS: 928120; Name: Dow Jones &Co Inc; NAICS: 511110, 511120,

511130, 519130, 523210; Name: United Steelworkers of America; NAICS: 813930;

Name: World Trade Organization; NAICS: 928120; Name: European Union; NAICS:

926110, 928120

Publication title: Wall Street Journal (Online); New York, N.Y.

Pages: n/a

Publication year: 2018

Publication date: Jun 1, 2018

Section: Politics

Publisher: Dow Jones &Company Inc

Place of publication: New York, N.Y.

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Last updated: 2018-06-08

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