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EU joins global battle against Trump tariff onslaught
WHISTLER, Canada, June 2, 2018 (BSS/AFP) – The EU on Friday launched its
first counteroffensive against Washington’s punishing steel and aluminum
tariffs while the US began meetings in Canada with outraged finance ministers
from its top trading partners.
Meanwhile in Washington, Trump floated the possibility of scrapping the 24-
year-old North American Free Trade Agreement in favor of separate bilateral
deals with Canada and Mexico.
Brussels and Ottawa filed legal challenges at the World Trade Organization
against Washington’s decision. The EU, Canada and Mexico also threatened
stiff retaliatory tariffs as they pushed back against President Donald
Trump’s multi-front trade offensive.
Canadian Prime Minister Justin Trudeau said Friday he was dumbfounded by
Washington’s national security basis for the tariffs, given that US and
Canadian troops had fought together in World War II, Afghanistan and
elsewhere.
“This is insulting to them,” he told NBC News.
British Prime Minister Theresa May said she was “deeply disappointed” and
reiterated a call for Britain and the EU to be “permanently exempted” from
the “unjustified” metals tariffs.
As the Group of Seven ministerial meeting opened in Canada, US Treasury
Secretary Steven Mnuchin faced stern reaction from his counterparts, who
accused Trump of jeopardizing the world economy with steps that would prove
job killers for all concerned.
– Trump and the ‘G6’ –
Canada Finance Minister Bill Morneau said the G7 discussions would be
“difficult.”
“We are sending the message that these measures are not helpful,” he told
reporters.
And French Finance Minister Bruno Le Maire said Europe “will not negotiate
with a gun to our heads.”
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They are joined at the meeting by officials from Britain, Germany, Italy
and Japan.
“Unfortunately, we are being treated to a G6 + 1, with the United States
squaring off against the rest and risking the economic destabilization of the
planet,” Le Maire said.
Behind closed doors, according to a European source who spoke on condition
of anonymity, Mnuchin said little, choosing not to get into detail and
deferring answers to next week’s G7 summit when heads of state gather in
Quebec, Canada.
Other delegations, however, hammered the points made earlier in public.
Le Maire argued that if Washington itself flouted the rules of
international commerce, it would have a harder time convincing China to abide
by them.
The US imposed the tariffs in March, but gave Canada and the EU — the
biggest sources of foreign aluminum and steel for the US — a grace period
that ended at midnight Thursday.
Trump’s decision drew furious responses from Canadian President Justin
Trudeau, German Chancellor Angela Merkel and French President Emmanuel
Macron.
The EU is preparing to slap tariffs on US products including bourbon,
motorcycles and blue jeans worth up to 2.8 billion euros ($3.3 billion).
“If players in the world don’t stick to the rule book, the system might
collapse. That is why we are challenging the US and China at the WTO,” EU
Trade Commissioner Cecilia Malmstrom said.
Macron told Trump in a telephone call that the tariffs were “illegal,” and
Merkel said the measure “risks touching off spirals of escalation that in the
end hurt everyone.”
Canada unveiled a package of counter-tariffs on US imports valued at
Can$16.6 billion (US$12.8 billion).
And Mexico said it would impose retaliatory duties on a variety of US
goods, including steel and a host of agricultural goods, including pork,
apples and cheese.
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– ‘Incomprehensible’ –
The prospect of a global trade war has roiled financial markets this week
even if they were back in positive territory on Friday due to upbeat US
economic data.
Berenberg Bank economist Holger Schmieding argued that the direct impact of
a US-EU trade war on the world economy would actually be rather small.
Nevertheless, “Trump’s contempt for international rules can deal a
significant blow to business confidence especially in trade-oriented
nations,” Schmieding said.
The WTO’s former chief, Pascal Lamy, also said the damage would likely be
limited in concrete terms.
“We have to keep things in proportion,” he said on the French radio station
France Info. He estimated that the economic impact of the tariffs would
amount to “a very small part of trade flows as a whole.”
But others have estimated the impact as up to a full point off global
growth if the conflict expands and retaliation goes into effect.
The German carmakers’ federation described the imposition of tariffs as
“incomprehensible.”
“In a connected, global economy, customs barriers don’t benefit anyone,
including the United States,” the VDA federation said.
Germany’s carmakers are especially braced for the latest threat from Trump,
who earlier this month launched proceedings that could eventually slap 25
percent tariffs on auto imports.
“I know he has a very particular problem with German cars,” warned
Malmstrom.
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