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United States trading partners, businesses say tariffs will backfire

11 Mars 2018

While some would argue that President Trump is just making good on his campaign promise to level the worldwide trade playing field, others, like White House economic adviser Gary Cohn, are concerned that this potential action could hurt the US economy and more importantly, trigger a trade war that could cause the next global recession.

In making the long-awaited announcement Thursday, Trump says the US industry has been "ravaged by aggressive foreign trade practices". "We are counting on being excluded".

Trump said Mexico and Canada would be exempt from the tariffs pending a new NAFTA deal.

Trump said he was merely fulfilling a campaign promise, saying he had been talking about perceived trade injustices "a long time, a lot longer than my political career". Whether he's too stubborn to admit error or actually believes his statement that trade wars are "easy to win", Trump seems determined to encourage retaliation.

"The USW - both our US and Canadian membership - has been united in advocating that Canadian production of steel and aluminum not be subject to any tariffs", said USW International President Leo W. Gerard in a news release. In making the long-awaited announcement Thursday, Trump says the USA industry has been "ravaged by aggressive foreign trade practices".

Unite national officer for steel Tony Brady said: "US tariffs on United Kingdom steel would be devastating for the British steel industry and the thousands of workers who have battled for its survival, alongside their trade unions".

There would be a reduction in tariffs for countries that "treat us fairly", he said but said "many of the countries that treat us the worst on trade and on military are our allies".

That would allow Trump a symbolic victory while protecting jobs in the EU. But he showed more leniency than initially thought.

The 28-country bloc has previously vowed to impose counter-tariffs on iconic American products, including many from pro-Trump states, such as bourbon, Harley Davidson motorcycles, Levi's jeans, peanut butter, cranberries and orange juice.

And on Thursday, while making the link between trade and national security, he repeated previous accusations that some American allies have not been paying their fair share on defense. He singled out Germany for criticism both for its large trade surpluses with the United States and because it remains below the 2 percent North Atlantic Treaty Organisation spending target.

The United States spends much more on security and defense than North Atlantic Treaty Organisation members including France, Germany and the UK.

The EU was clear on Friday that it views tariffs and defense as separate.

But she warned that if the issue can't be resolved bilaterally or through the World Trade Organization, then "we will have to protect our industry with rebalancing measures".

The prospect of across-the-board tariffs that would affect both America's allies and nations with massive US trade surpluses made some in the White House uneasy, especially chief economic adviser Gary Cohn, who announced his resignation this week.

Republicans in Congress have urged the president to take a more surgical approach to tackling the problem of China's flooding of global markets with cheap steel.

The United States and European Union previously sought to level the playing field with targeted tariffs.

"This is not merely an economic disaster, but it's a security disaster we want to build our ships, we want to build our planes. with steel and aluminium from our country".

A trade war between Europe and the United States can still be averted, German economy minister Brigitte Zypries said on Saturday, adding she hoped that talks in Brussels this weekend could help to prevent an escalation.

"Everything you have for breakfast", Malmstroem said.

United States trading partners, businesses say tariffs will backfire