EU has ‘whole arsenal’ for any trade war with US
PARIS/BEIJING: Europe and China warned President Donald Trump yesterday they would respond in the event of a trade war with the United States, with one Brussels official saying retaliation could also target goods from areas governed by his Republican Party. Trump was expected later in the day to sign a proclamation imposing 25 percent tariffs on steel imports and 10 percent on aluminum, though a White House official said this could slide into Friday as documents had to be cleared through a legal process.
Both Brussels and Beijing voiced hope that a trade war could be averted, and the European Commission raised the prospect that Trump could consider exempting the EU’s 28 member states from the measures along with US neighbors Canada and Mexico. Some countries advised against any overhasty reaction to Trump’s plan, which has drawn fire at home as well as rattling global financial markets, particularly Canada which as a close trading partner of the United States has perhaps most to lose.
But the European Union talked tough. “If Donald Trump puts in place the measures this evening, we have a whole arsenal at our disposal with which to respond,” European Financial Affairs Commissioner Pierre Moscovici said. Counter-measures would include European tariffs on US oranges, tobacco and bourbon, he said, adding that some products under consideration for an EU riposte were largely produced in constituencies controlled by Trump’s Republicans. “We want Congress to understand that this would be a lose-lose situation,” Moscovici told BFM TV. The EU is by far the biggest trading partner of the United States by value and, after China, member states have together the biggest trade surplus with the country. Once approved by Trump, the tariffs would go into effect after two months.
Meanwhile, President Donald Trump’s team played down talk of a trade war Wednesday as it fought to limit a financial market sell-off, promising a quick decision on contentious tariffs that prompted a popular economic advisor to the president to quit. Administration big guns Commerce Secretary Wilbur Ross and Treasury Secretary Steve Mnuchin rushed to the cameras to calm market jitters over proposed steel and aluminum duties, which they indicated were still negotiable and would not hurt growth. As markets fell on news that Wall Street favorite Gary Cohn had resigned from the White House in protest at Trump’s trade decision and global partners vowed retaliation, Ross tried to calm fears of a trade war. “We’re going to have sensible relations with our allies,” he told CNBC, claiming that Trump’s policy was well “thought through. We’re not looking for a trade war.”
Mnuchin joined the effort, claiming that the tariffs, which are not yet finalized, would not hurt the administration’s projections for three percent growth. “We’re comfortable that we’re going to manage through this so that it is not detrimental to our growth projections,” he told Fox Business. As stocks fell off on Wall Street, a fierce battle over Trump’s proposals raged behind the scenes in Washington. Trump surprised and angered Republican lawmakers with his impromptu tariff announcement last week.
The tariffs are designed to counter cheap imports, especially from China, which Trump says are undermining US industries and jobs.
In Beijing, Foreign Minister Wang Yi said China and the United States did not have to be rivals, and history showed that trade wars were not the correct way to resolve problems. “Especially given today’s globalization, choosing a trade war is a mistaken prescription. The outcome will only be harmful,” he said on the sidelines of an annual meeting of China’s parliament. “China would have to make a justified and necessary response.” Trump addressed China in tweets on Wednesday, demanding that Beijing lay out plans for reducing its trade surplus with the United States by $1 billion. China had a record $375.2 billion goods surplus with the United States last year.
Trump’s administration has faced growing opposition to the tariffs from prominent congressional Republicans and business officials worried about their potential impact on the economy. The White House has said there could be a 30-day exemption from the tariffs for Mexico and Canada – which are members of the North America Free Trade Association (NAFTA) – and some other countries based on national security.
Trump wants to renegotiate the NAFTA and a White House official linked any extension of the exemption to progress in NAFTA talks. In Brussels, European Commission Vice President Jyrki Katainen said he had read that Britain might be in line for an exemption too. While Britons have voted to leave the EU, the country remains a member until next year. —Agencies