President Donald Trump yesterday pledged the United States will show “flexibility” to “real friends” as the White House prepares to roll out steel and aluminium tariffs that have sparked fears of a global trade war.
Trump’s impromptu announcement he intends to slap 25% import taxes on steel and 10% on aluminium, has sparked a revolt within his own Republican party, pushed a top aide to quit, and angered major trading partners who vowed retaliation.
The proposed duties — which have already roiled world markets for days — were to be formalised yesterday and Canada and Mexico will initially be exempt according to Trump’s top trade advisor Peter Navarro.
“We have to protect & build our Steel and Aluminium Industries while at the same time showing great flexibility and co-operation toward those that are real friends and treat us fairly on both trade and the military,” the president tweeted yesterday.
Administration big guns Commerce Secretary Wilbur Ross and Treasury Secretary Steve Mnuchin rushed to calm market jitters Wednesday over the tariff plans, which they indicated were still negotiable and would not hurt growth.
The US would offer temporary relief to Canada and Mexico for 30 days, the Washington Post reported citing senior US officials, breaks that could be extended depending on progress in the ongoing North American Free Trade Agreement negotiations.
But Brussels warned against letting individual European states off the hook — such as Washington’s close ally Britain — saying any such exemption would be viewed as applying to the whole bloc.
European Commission Vice President Jyrki Katainen said Brussels would not accept a carve-out for Britain, which has voted to leave the EU but remains a member until 2019.
“What I have read today is that they are probably considering some exemptions to Nafta countries...but also they have mentioned the UK and maybe some other countries,” Katainen told reporters.
“So if they try to make (an) exemption for one of our member states it means the EU as a whole.”
The EU had already sounded a stern warning Wednesday as it readied to lash back with US-targeted tariffs of its own on everything from steel to peanut butter, orange juice, cranberries, bourbon and denim jeans.
“Trade wars are bad and easy to lose,” EU President Donald Tusk warned, directly rebuffing Trump’s assertion last week that they were “good and easy to win”.
With markets tumbling following the resignation of Wall Street favourite Gary Cohn — Trump’s top economic adviser who had lobbied ardently against the tariffs — Ross tried to assuage fears.
“We’re going to have sensible relations with our allies,” he told CNBC, claiming that Trump’s policy was well “thought through. We’re not looking for a trade war.”
Data released Wednesday showed the US foreign trade deficit widened in January to its highest level in nine years — heaping pressure on Trump, who had campaigned on a promise to reverse that trend.
Trump blamed the deficit on his White House predecessors, while also taking aim at Beijing.
“China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States,” he tweeted.
“Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!”
China meanwhile warned yesterday it was ready to respond to US tariffs if they materialise.
“Choosing a trade war is surely the wrong prescription, in the end you will only hurt others and yourself,” Foreign Minister Wang Yi said, adding that “China will certainly make an appropriate and necessary response.”
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