Published: Tue, March 13, 2018
Finance | By Claude Patterson

Odds increasing for all-out trade war

Odds increasing for all-out trade war

Americans do not like President Donald Trump's proposed tariffs, according to a new poll.

"As the two Chairmen have reinforced, the Administration and Congress must work together on trade policies that build off the momentum of the President's tax cuts, which is why any tariffs should be narrow, targeted, and focused on addressing unfairly traded products, without disrupting the flow of fairly traded products for American businesses and consumers", Aronson said in a statement.

But don't expect an impulsive and ignorant man like Trump to heed the lessons of economic history, logic of retaliation, and the basics of trade. "Tariffs on steel and aluminium will only come off if new and fair NAFTA agreement is signed".

Tensions between the USA and its longtime trade partners and allies spiked last week after Trump announced a sweeping 25 percent tariff on all foreign steel imports and 10 percent on all aluminum imports, sparking worldwide condemnation and fears of trade war. "A tariff obviously is going to get passed on to the consumer eventually in the price of goods and that ought to be everybody's concern". In terms of global trade, they are just 0.6 percent, investment bank Morgan Stanley said in a report.

A bottle of Bulleit Kentucky bourbon at the Spirit de Milan cafe in Milan, Italy.

Trump has already said he would then up the ante and work to raise tariffs on cars coming into the United States from Europe - although that would require a formal process or an act of Congress.

"You can't have the world's biggest economy act like this and not expect there are going to be reverberations all through the global financial system", he said. But the opening salvos of a trade war may be fired before that happens.

A list tallied by the European Commission indicates a 25 percent levy on multiple USA goods, Bloomberg reported Tuesday.

Trump announced the tariffs after hearing from executives of companies that will be protected.

Repeating his concern about the U.S. trade deficit of US$800 billion previous year, he said "the biggest problem is China". "But we have to do it".

Aluminium Association of Canada CEO Jean Simard said that after seeing the tariff tweets from Trump on Monday he made clear to the government that the industry supports Canada's firm position in talks. He tweeted "When a country (USA) is losing many billions of dollars in trade with virtually every country it does business with, trade wars are good and easy to win".

America's trade deficit is the gap between how much in goods and services it imports from foreign countries, and how much it exports. On Tuesday, he urged Trump to take a "surgical" approach rather than imposing penalties on all imported steel and aluminum.

Inside the White House, there appeared to be room to modify the proposals, despite Trump's tough talk.

Trevor Kincaid was the Deputy Assistant US Trade Representative for Public Affairs in the Obama administration and is a member of the Washington International Trade Association; he previously served in the US Senate and House of Representatives.

It also put the World Trade Organisation, the body which oversees world trade, in something of a bind.

Economists agree that Trump's policy would threaten far more American jobs than it would protect. She also points out the USA economy has created tens of millions of jobs since NAFTA came into force. When asked how long the tariffs would be imposed, Trump replied: "Unlimited period".

"Geopolitically, there is a misconception that it's about a pending US-China trade war", Dr Giovanni Di Lieto, an global trade law expert from the Monash University Business School, told SBS News.

The president's White House trade adviser, Peter Navarro, dismissed the impact of a trade war during an appearance on Fox and Friends Monday. "The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains". Is it caused by USA consumers' voracious appetite for goods made by foreign manufacturers? "I think you are hearing some of that smooth operator (commentary)".

Describing itself as a key ally of the USA through the bilateral North American Aerospace Defence Command (NORAD) and NATO, Canada has been seeking an exemption, but has also threated to retaliate if the US does indeed go ahead with tariffs on Canadian steel and aluminium.

While Trump said he did not think there would be a trade war, USA trading partners already are preparing to retaliate, and have pledged to file a dispute at the World Trade Organization.

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