Trade wars on again in response to Trump’s interventionism

It’;s hard to keep up with Donald Trump’s varying positions on a number of issues, but it looks like trade wards are back on after he imposed tariffs in steel and aluminium imports.It’s too soon to tell what this may escalate into, but the signs look ominous.

Reuters: U.S. isolated at G7 meeting as tariffs prompt retaliation

U.S. President Donald Trump told Canada and the European Union on Friday to do more to bring down their trade surpluses, a day after hitting them and Mexico with import tariffs on steel and aluminum.

Trump castigated Canada, a top U.S. trade partner and ally, in a tweet on Friday morning, saying it had treated U.S. farmers “very poorly for a very long period of time.”

“Highly restrictive on Trade! They must open their markets and take down their trade barriers! They report a really high surplus on trade with us,” he wrote.

Trump also told French President Emmanuel Macron of the need to “rebalance trade with Europe,” the White House said.

The strong words followed swift responses to the tariffs by Canada, Mexico and the EU, which all plan to retaliate with levies on billions of dollars of U.S. goods, including orange juice, whiskey, blue jeans and Harley-Davidson motorcycles.

ODT: Trade war repercussions likely

By later today,  or early tomorrow, it will be known the extent to which Europe, Canada and Mexico will go to counter the United States’ tariffs.

Canada and Mexico have made early moves but there are suggestions more barriers will be put in place for US exports.

US President Donald Trump unilaterally imposed sweeping tariffs on  steel and aluminium imports from the European Union, and its Nafta trading partners Canada and Mexico.

European commissioner Jean-Claude Juncker is promising to have retaliatory measures in place. In a furious address to a conference, Mr Juncker was threatening like for like, enough to make free-trade countries like New Zealand shudder.

The move is likely to have an immediate impact on global trade in steel and aluminium, particularly between the US and Canada, the largest supplier of imported steel to the US.

A meeting of the Group of Seven, in Canada, was taken by surprise by the announcement. Concern about Mr Trump’s hardening approach to trade dominated the discussion panel as top policy makers from the United States, Britain, Germany, France, Italy, Japan and Canada gathered in the alpine village of Whistler, British Columbia, Canada.

There is growing concern trade wars may turn into real wars — particularly with the ongoing tit-for-tat squabble between China and the US.

On Tuesday, the White House pledged to slap an additional 25% tariff on a long list of Chinese products, including metals. Within hours Beijing retaliated with the promise to lift levies on $US50 billion worth of US imports by 25%. The Chinese list includes soybeans, automobiles, chemicals and aircraft. In response, Mr Trump threatened an additional $US100 billion in tariffs against China.

Global supply chains are at risk from the actions being initiated by Mr Trump and, because of his powerful position and erratic behaviour, no-one knows for sure how this will play out.

Mr Trump’s posturing is damaging to not only global trade. He is facing a backlash from some of his Republican allies, who are now worrying about surviving midterm elections.

The bigger fear over the current conflict is how escalating retaliatory tariffs may undermine institutions such as the World Trade Organisation, which have underpinned the world trading system since the aftermath of World War 2 and have prevented the outbreak of major trade wars.

Reuters:

Trump’s tariffs on Washington’s closest allies also drew condemnation at home from Republican lawmakers and the country’s main business lobbying group and sent a chill through financial markets.

The US markets keep bouncing around:

This year they have been as erratic as Trump, which is no coincidence.

While steel and aluminium tariffs may help protect some US industries they are likely to raise prices on many products that use steel and aluminium.

These particular tariffs aren’t likely to impact greatly on New Zealand, but if it escalates into a wider trade war then we are likely to get tossed around in the storm.

Meanwhile Trump is trying to prop up some big business friends: Trump orders Energy Department to help ailing coal, nuclear plants

U.S. President Donald Trump on Friday directed Energy Secretary Rick Perry to take emergency steps to keep at-risk coal and nuclear plants running, the White House announced.

Under the directive, Perry would require grid operators to buy electricity from ailing nuclear and coal-fired power plants to keep them from being shuttered.

Trump is an erratic interventionist.

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10 Comments

  1. Reply
  2. Fight4NZ

     /  June 2, 2018

    Ominous. We could end up with more sovereignty, more localised manufacturing, less imposition of global corporate manifesto and the sky will fall.

    Reply
  3. Alan Wilkinson

     /  June 2, 2018

    US, EU, China – bunch of protectionist thugs slugging it out. What,’s not to like?

    Reply
  4. David

     /  June 2, 2018

    Given the outrageous trade barriers the EU has its a hell of a glass house they are throwing rocks from. Germany has a trade surplus of 8.5% of GDP it is the worlds biggest currency manipulator.
    Shame NZ wasnt big enough to smash down unfair trade practices like Trump.

    Reply
  5. Corky

     /  June 2, 2018

    God speed, Mr President. After nine years of laughing at America under Obama’s presidency , they ain’t laughing anymore. Will there be consequences? Yes. But didn’t Trump promise this action during his election campaign? Yep, sure did. It’s called delivering on your election promises.

    Now, Trump is in control. If things get bad he can say: let’s start from scratch with a fair playing field for everyone. And of course everyone will have no choice but to sit around the negotiating table.

    President Trumpy is a genius in a fools disguise.

    Reply
  6. George

     /  June 2, 2018

    Trump is the President of the US and wants his people employed and their economy booming.
    Pretty simple

    Reply
    • Kitty Catkin

       /  June 2, 2018

      That’s stating the obvious, but he needs to go the right way about it or the effect will be the opposite.

      Reply
  7. Kitty Catkin

     /  June 2, 2018

    It’s not just the number of issues that are hard to follow his change of positions on, by the sound of it 😀

    Reply
  8. Gezza

     /  June 2, 2018

    Aw what the heck. What could go wrong? Ok, so the last time they were like this the Japanese bombed Pearl Harbour but they didn’t have nukes then. And if everybody winds up with tariffs we just go back to organising trading blocs again.

    Reply
  9. seer

     /  June 4, 2018

    “Trump is […wait for it!….] an erratic interventionist.”
    Congratulations on the epithet.

    Reply

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