Trade war fears rise as countries hit by Trump steel tariffs retaliate

Robyn Valdez
June 2, 2018

On Friday, Trump demanded Canada "open their markets and take down their trade barriers".

In announcing the tariffs on Thursday, U.S. Secretary of Commerce Wilbur Ross noted that Canada and Mexico were initially exempted from Trump's tariffs. The Dow Jones Industrial Average lost 1 percent and the S&P 500 shed 0.69 percent.

Germany's Volkswagen, Europe's largest automaker, is warning the Trump administration's decision to impose tariffs on aluminum and steel imports from Canada, Mexico, and the European Union could start a trade war that no side would win.

They come as the two countries, along with Mexico, try to hammer out a renegotiated North American Free Trade Agreement and a week before Trump sets foot on Canadian soil for the first time as president, in the G7 summit that Trudeau is hosting in Quebec.

The peso has dropped 6.4% in May, the biggest monthly decline since November 2016 after Donald Trump won the US presidential election.

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The Trump administration imposed 10 per cent tariffs on Canadian aluminum and 25 per cent tariffs on steel imports Thursday, erupting a trade war as the Canadian government retaliated with its own $16.6-billion in countermeasures. "The EU believes these unilateral USA tariffs are unjustified and at odds with World Trade Organisation rules", Jean-Claude Juncker, President, European Commission, said on Thursday.

The peso was down 1.18% to 19.9741 versus the dollar at 11:00 a.m. ET. Shares of Harley-Davidson Inc fell 2.17 per cent and Brown-Forman Corp, maker of Early Times and other bourbon brands, lost 2.1 per cent.

EU members have given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of US exports if Washington ends tariff exemptions. The list includes roughly 160 products such as United States sunbeds, paper towels, corduroy trousers and porcelain tableware that could face European Union tariffs between 10% to 50%.

Now they put their noses to the grindstone and get back to the North American Free Trade Agreement.

Mr. Trump says - as he has many times before - that NAFTA has been a awful deal for the United States, while its North American trading partners make "many billions of dollars" at the expense of Americans.

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The International Monetary Fund (IMF) has joined criticism of President Donald Trump's plan to impose tariffs on metal imports from key United States allies, which came into force on Thursday, saying there would be no winners from a "protracted trade war" as countries spun out retaliatory taxes on exports to the USA and Brussels filed legal challenges against the U.S. and China.

"Other countries", according to the announcement, is in reference to those nations that were granted temporary exemption but did not negotiate settlements under threat of the tariffs.

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

The tariffs will be 25 percent on imported steel and 10 percent on aluminum. Among the gainers, shares of AK Steel rose 3.8 percent while U.S. Steel added 3.4 percent.

"That Canada could be considered a national-security threat to the United States is inconceivable", he said, adding that the people of the USA are not the target of the countermeasures, and that Canada would far prefer that its hand not be forced.

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They thanked countries and organizations that rejected the United States embassy move, condemning others for taking part in Monday's inauguration ceremony.

Mexico said it was open to "constructive dialogue" with the US and reiterated its support of the global trade system and its rejection of unilateral protectionism. The European Union and China said they will deepen ties on trade and investment as a result.

Other reports by Info About Network

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