Tensions rise over potential Trade War-US Allies Retaliate, American Businesses and Farmers Upset

WASHINGTON(TIP): President Trump on Thursday, May 31 imposed tariffs on imported steel and aluminum from the European Union, Canada and Mexico, triggering immediate retaliation from U.S. allies and protests from American businesses and farmers.

The tariffs — 25 percent on steel and 10 percent on aluminum — take effect at midnight Thursday, May 31, giving rise to fears of a major escalation of the trade war between the United States and its top trading partners.

The White House has said the U.S. tariffs — 25 percent duties on steel and 10 percent on aluminum shipments from Canada, EU member states and Mexico — are necessary to safeguard U.S. national security.

Stung by the U.S. action, the allies quickly hit back.

In announcing his country’s response, Canadian Prime Minister Justin Trudeau said it was “inconceivable” that Canada “could be considered a national security threat to the United States,” noting that U.S. fighter planes and tanks contain Canadian steel.

“These tariffs will harm industries and workers on both sides of the Canada-U.S. border and will disrupt supply chains that have made steel and aluminum from North America more competitive across the whole world,” he said in a press conference in Ottawa.

Effective July 1, Canada will impose tariffs of 25 percent on shipments of U.S. steel and 10 percent on aluminum, as well as on other products, such as playing cards, inflatable boats and yogurt. Canada’s finance ministry estimated the value of the U.S. goods subject to those tariffs at up to C$16.6 billion ($12.8 billion),

Jean-Claude Juncker, president of the European Commission, said the European Union also will apply news tariffs on American goods, with the trading bloc signaling it would target products made in states represented by key Republican leaders. The EU has said it would respond with tariffs on $3.3 billion in American imports as early as June 20.

“The U.S. now leaves us with no choice but to proceed with a [World Trade Organization] dispute settlement case and with the imposition of additional duties on a number of imports from the U.S. We will defend the Union’s interests, in full compliance with international trade law,” Juncker said in a statement.

The E.U. said it would impose import taxes on politically sensitive items like bourbon from Senate Majority Leader Mitch McConnell’s home state of Kentucky. Mexico said it would levy tariffs on American farm products, while Canada zeroed in on the same metals that Trump has targeted.

The Mexican government said it would levy import taxes on U.S. exports of pork bellies, apples, cranberries, grapes, certain cheeses and various types of steel.

Thursday’s action was driven by the president’s conviction that allies and adversaries routinely take advantage of the United States and that efforts to resolve trade disputes are doomed unless he wields a big tariff stick.

“The United States has been taken advantage of for many decades on trade,” Trump said in a statement. “Those days are over. Earlier today, this message was conveyed to Prime Minister Justin Trudeau of Canada: The United State[s] will agree to a fair deal, or there will be no deal at all.”

Officials from the three trading partners — among Washington’s closest allies for decades — have dismissed the idea that their shipments to American customers endanger the United States — and some prominent Republicans attacked the tariffs as wrongheaded.

At home, some have expressed doubts about the position Trump has taken.

Sen. Ben Sasse was blunter in criticizing the tariffs.

“This is dumb. Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents,” the Nebraska Republican said in a statement. “We’ve been down this road before — blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again.’ “