The United States is escalating trans-Atlantic and North American trade tensions, imposing a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the European Union, Canada and Mexico that will go into effect on Friday.
The move is prompting immediate retaliatory tariffs from the Europeans – expected to target such iconic American products as Harley Davidson motorcycles and Levi’s jeans, as well as Kentucky bourbon and Tennessee whiskey.
“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” U.S. Commerce Secretary Wilbur Ross told reporters in a telephone briefing on Thursday.
“This is a bad day for world trade,” responded European Commission President Jean-Claude Juncker, who announced there is “no choice” but to proceed with a World Trade Organization dispute settlement case and additional duties on numerous U.S. imports.
“We will defend the EU’s interests, in full compliance with international trade law,” Juncker added.
U.S. President Donald Trump has said the tariffs are needed for national security, claiming current trade deals harm U.S. companies and cost America jobs.
The U.S. also negotiated voluntary export limits from South Korea, Argentina, Australia and Brazil, said the commerce secretary.
The U.S. also negotiated quotas or volume limits on other countries such as South Korea, Argentina, Australia and Brazil instead of tariffs, Ross told reporters.
Ross, in Paris, interviewed after the announcement on CNBC, brushed off retaliatory moves by Europe on $3 billion worth of American goods, saying “it’s a tiny, tiny fraction of one percent” of trade.
Ross, a banker known for restructuring failed companies prior to joining Trump’s Cabinet, also predicted America’s trading partners “will get over this in due course.”
“The United States is taking on the whole world in trade and it’s not going to go well,” predicted Simon Lester, trade policy analyst at the libertarian Cato Institute.
‘Not very cataclysmic’
The U.S. trade action has spooked investors, sending key U.S. stock indexes down in Thursday morning trading.
The drop is “not very cataclysmic in any event,” responded Ross in the CNBC interview.
Reacting to that comment, Lester told VOA News that while “we’re not talking about the end of the world, that’s true, but it’s still bad for the economy.”
Expected higher prices for U.S. consumers on some products is only one side of the equation, according to Ross, who noted that steel and aluminum makers in the United States are adding employment and opening facilities as a result of the U.S. government action.
“You can create a few jobs, however, you’re going to lose more in the process” as consuming industries will be placed at a disadvantage of paying more for raw materials compared to their foreign competitors, according to Lester.
“We are deeply disappointed that the U.S. has decided to apply tariffs to steel and aluminum imports from the EU on national security grounds,” according to a statement from the British government. “The UK and other European Union countries are close allies of the U.S. and should be permanently and fully exempted from the American measures on steel and aluminum.”
The Confederation of British Industry, representing 190,000 businesses in the United Kingdom, immediately appealed to the EU to “avoid any disproportionate escalation” by taking retaliatory actions.
“There are no winners in a trade war, which will damage prosperity on both sides of the Atlantic,” said CBI International Director Ben Digby in a statement. “These tariffs could lead to a protectionist domino effect, damaging firms, employees and consumers in the USA, UK and many other trading partners.”
Prior to Ross’ announcement, Germany’s foreign minister, Heiko Maas, declared “protectionism and isolation against free trade mustn’t regain the upper hand.”
Maas spoke at a news conference on Thursday alongside his Chinese counterpart Wang Yi, saying neither Berlin nor Beijing had an interest in “turning back the clocks when it comes to trade policy.”
Wang stressed the importance of the two countries’ common interests when it comes to finance and security policies and said China would continue to open its markets for its trade partners.
German’s Chancellor Angela Merkel, during a visit to Lisbon, Portugal, on Thursday said the 28-nation European Union has made plain to the United States that such tariffs are incompatible with World Trade Organization rules.
Trump, in March, announced the United States would impose such tariffs but he granted an exemptions that expire Friday to the EU and other U.S. allies.
France’s finance minister, Bruno Le Maire, who met Ross earlier on Thursday, says the U.S. shouldn’t see global trade like the Wild West or the “gunfight at the OK Corral.”