Trump imposes steel, aluminum tariffs on U.S. allies and Europe retaliates

President Trump followed through on a threat to impose steep metal tariffs on U.S. allies Thursday, a long-awaited decision that analysts said moved the country closer to a trade war.

Commerce Secretary Wilbur Ross said that Canada, Mexico and the European Union would be subject to a 25% tariff on steel and a 10% tariff on aluminum beginning at midnight on Thursday. Brazil, Argentina and Australia agreed to limit steel exports to the U.S. to avoid tariffs, he said.

“The president’s overwhelming objective is to reduce our trade deficit,” Ross said.

The decision was the latest by the Trump administration to project a more protectionist stance amid ongoing trade negotiations with China and other countries. But it drew a sharp rebuke and promises of retaliation from longstanding allies.

“These tariffs are totally unacceptable,” Canadian Prime Minister Justin Trudeau said Thursday. “These tariffs are an affront to the long-standing security partnership between Canada and the United States.”

European trade officials have previously threatened to respond to Trump’s move with  duties on U.S.-made motorcycles, orange juice and bourbon, among other things. Jean-Claude Juncker, president of the European Commission, reiterated that position Thursday, saying Europe would impose duties on “a number of imports from the U.S.”

“This is protectionism, pure and simple,” he said.

The Mexican economic ministry said it would move to place tariffs on U.S.-made pork, flat steel, apples, cheese and other products.

Trump announced the tariff and aluminum tariffs in early March but offered temporary exemptions to the European Union, Canada, Mexico and a number of other allies. He extended those exemptions in late April, noting at the time it would be the “final” delay unless the countries agreed to other concessions.

“We are awaiting their reaction,” Ross said of the other countries. “We continue to remain quite willing, indeed eager, to continue discussions.”

The move promoted criticism from a number of Republicans on Capitol Hill, especially those with large agricultural industries.

“This is dumb,” said Sen. Ben Sasse, R-Neb. “Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents.”

The decision comes days after the Trump administration announced $50 billion of new tariffs on Chinese imports, after officials had earlier said it was “putting the trade war on hold” with Beijing. Ross is set to travel to China this weekend to continue trade talks.

The Trump administration has relied on a 1962 law that allows countries to impose trade restrictions for national security purposes. The president has also justified the tariffs by pointing out “shuttered plants and mills” and the decades-long slide of manufacturing.

Several analysts said they are concerned the approach will have the opposite effect.

“The initial blows in the trade wars have finally landed,” said Eswar S. Prasad, former head of the International Monetary Fund’s China division and a professor at Cornell University. “It is now clear that Trump’s threats about trade sanctions are more than just bluster and are to be taken seriously.”

Prasad said the hard line approach might net Trump some short-term wins, but said “it could eventually result in the U.S. playing a diminished” role in global trade.

“He doesn’t have a strategy that’s going to lead to making American manufacturing great again,” said Robert Scott, a trade expert at the Economic Policy Institute. “There will continue to be a series of tit-for-tat battles.”

The U.S. imported 34.6 million metric tons of steel last year, a 15% increase from 2016, according to the U.S. Department of Commerce.

Canada was the top source of U.S. imported steel, accounting for 77%, according to the International Trade Administration. Mexican steel accounts for about 9% of U.S. imports.

The majority of that metal is used in construction, auto manufacturing and appliances.

The tariffs, as well as export controls agreed to by Brazil and others, will raise the price of steel and aluminum in the U.S., making domestic producers more competitive while adding to the price buyers of the metals must pay.

“We think that’s going to put the industry in real peril,” said Jerry Howard, president of the National Association of Home Builders. “We were very excited by the tax bill, but it turns out the tax bill giveth, and tariffs taketh away.”

Ann Wilson with the Motor & Equipment Manufacturers Association said its members are already paying tariffs on many of the components they import to make auto parts. Imposing additional barriers on the metals used to make those parts, she said, amounts to a “double tariff.”

“There is little doubt that the uncertainty and added costs the administration is creating will put U.S. investments and jobs at risk,” Wilson said.

Steel trade with Canada and Mexico is covered under the North American Free Trade Agreement, but the president is relying on a provision of U.S. law that allows him to claim the imports represent a threat to national security.

Many observers believe the announcement Thursday is the latest effort to prod stalled negotiations over rewriting NAFTA, which Trump repeatedly promised to do during his campaign for president.

“This really is an attempt to strengthen the negotiating power of the U.S. when it comes to renegotiating NAFTA,” said Ned Hill, who teaches economic development at Ohio State University. “This is just very public, bare-knuckle negotiating.”

[USA Today]

Reality

Trump promised he would go after countries who “cheated” in trade, but we do not have a major trade imbalance with our friends and allies.

Trump says China agreed to good deal for American farmers

President Trump touted in a tweet on Monday China’s promise to buy more US agricultural products following trade talks between the two countries, calling it a good deal for American farmers.

“China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products – would be one of the best things to happen to our farmers in many years!,” the president posted on his account, one of three tweets about China.

In another tweet, he questioned why former President Barack Obama failed to take action against China for the trade imbalance and suggested that he would work with Senate Democrats on developing fair trade policies.

“I ask Senator Chuck Schumer, why didn’t President Obama & the Democrats do something about Trade with China, including Theft of Intellectual Property etc.?,” Trump wrote. “They did NOTHING! With that being said, Chuck & I have long agreed on this issue! Fair Trade, plus, with China will happen!”

A third tweet said: “On China, Barriers and Tariffs to come down for first time. ”

About two hours later, he reiterated his earlier tweet that American farmers would benefit.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” Trump said.

The final tweet said: “On China, Barriers and Tariffs to come down for first time. ”

In the joint US-China statement issued Saturday, China pledged to “significantly increase purchases of United States goods and services.”

“This will help support growth and employment in the United States. Both sides agreed on meaningful increases in United States agriculture and energy exports. The United States will send a team to China to work out the details,” it said.

The statement followed two days of talks involving Chinese Vice Premier Liu He and Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross and Trade Representative Robert Lighthizer.

On Sunday, Mnuchin said the US was putting a trade war with China on hold by not imposing major tariffs after the concessions by Beijing.

“We’re putting the trade war on hold. So right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin said on “Fox News Sunday.” But Mnuchin and Lighthizer said that could change if China doesn’t follow through on its commitments.

“As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations,” Lighthizer said in a statement.

Trump during the presidential campaign railed about how China’s trade policies hurt American business, and his administration has been trying to get Beijing to take steps to lower its trade deficit with the US by at least $200 billion by the end of 2020.

[New York Post]

Reality

China agreed to the same deal we had before, with no commitment to buy a specific amount of any goods, and their “concession” was to buy the same products it was going to buy anyway.

Trump claimed he could easily win a trade war, yet got nothing he wanted, the trade gap hasn’t shrunk, and we just spent months harming US agriculture so we can be back to where we were before.

Trump Throws Chuck Schumer a Shoutout on China Trade Talks: We ‘Have Long Agreed’

The White House announced over the weekend that President Donald Trump and Chinese President Xi Jinping had come to an agreement that would see China reduce its trade deficit with the US, and in exchange the US would remove tariffs.

The halt on tariffs cooled off a potential trade war between the two countries, but it’s not clear that the new agreement is much of a win for Trump.

“I ask Senator Chuck Schumer, why didn’t President Obama & the Democrats do something about Trade with China, including Theft of Intellectual Property etc.?” Trump tweeted on Monday morning. “They did NOTHING!”

“With that being said, Chuck & I have long agreed on this issue!” he added. “Fair Trade, plus, with China will happen!”

[Mediaite]

Reality

China intellectual property theft was actually a big deal with Obama.

Trump even continued with Obama’s anti-hacking policies toward China.
(https://www.politico.com/story/2017/11/08/trump-obama-china-hacking-deal-244658)

OPEC ‘At It Again,’ Trump Says

In another tweet, Trump complained about the Organization of the Petroleum Exporting Countries, saying the cartel was “at it again.” OPEC has teamed up with Russia and other major oil CLK8-0.04%  producers to restrain output, something that has pushed crude back up to late 2014 levels.

“No good and will not be accepted!” Trump complained. But while he’s hardly the first politician to take aim at OPEC, there’s little that can be done about its actions, as MarketWatch reports.

Read: Why Trump is tweeting about OPEC — and what he can do about oil prices.

[MarketWatch]

Trump just called off a deal on DACA

On Sunday, a little more than an hour after tweeting “HAPPY EASTER!” to his 49.8 million followers, President Donald Trump appeared to call off a major immigration deal.

“Republicans must go to Nuclear Option to pass tough laws NOW. NO MORE DACA DEAL!” the president wrote, in part, referring to the Democrat-led initiative to protect the children of unauthorized immigrants from deportation. That was the first tweet, which seemed to call for the end of the filibuster in the Senate to pass tougher immigration laws and for the end of negotiations to get a deal on DACA.

The other two — where the president declared that people in Mexico were laughing at America’s immigration laws, and suggested that the international trade deal NAFTA might have something to do with that — seemed designed to further stoke traditional conservative fears that surround immigration.

These tweets are mostly typical rhetoric for Trump: He’s prone to suggesting that more immigration will lead to more crime and violence despite decades of evidence that more immigration does not correlate with more crime and may actually lead to less crime.

The DACA part, however, is new. Previously, Trump actually threatened to veto a budget deal — and shut down the government — in part because it didn’t include a deal on DACA recipients. Now he’s saying prospects for a deal are done.

Trump seems increasingly frustrated his agenda isn’t moving forward

According to a recent report from the Washington Post, the president has been frustrated that his proposed wall at the US-Mexico border hasn’t gotten much traction — lately, he’s turned to privately lobbying for the military to pay for it. As Tara Golshan explained for Vox, the military likely won’t be able to take up Trump’s request, because the money it’s been given by Congress is allocated for specific programs that aren’t the wall.

Trump’s new tweets also appear to come in response to reports that a huge caravan of Central Americans is making its way through Mexico to the US. The group is reportedly fleeing poverty, violence, and political unrest in the region, hoping to get asylum once they make it to America — although some have said they’ll cross the border illegally if necessary.

It’s unclear how federal officials will ultimately respond to the caravan. But Trump, at least, is using the moment to push for tougher immigration laws.

[Vox]

Trump Insists U.S. Has Trade Deficit With Canada After Tapes Leak of Him Admitting It Doesn’t

President Donald Trump is now apparently doubling down on false comments that he admitted saying to Canadian PM Justin Trudeau.

After The Washington Post obtained audio of Trump telling Republican donors about a meeting with Trudeau in which he asserted that we have a trade deficit with Canada, a claim that the president admitted he had “no idea” was right or wrong at the time, the president tweeted this statement:

“We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive),” Trump wrote. “P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do…they almost all do…and that’s how I know!”

As many have pointed out, Trump’s own government acknowledges that U.S. has a trade surplus with Canada — of $12.5 billion:

To recap: The president had, by his own admission, “absolutely no idea” whether the U.S. had a trade deficit with Canada; he and Trudeau had to send people out of the room to find out the facts, they came back and said that, as Trudeau claimed, there was no trade deficit; then, Trump tweeted that there actually is a trade deficit with Canada, despite there being audio evidence of him admitting the opposite; his conclusion that there is a trade deficit is because “almost all countries” have one, “and that’s how I know!”

[Mediaite]

Reality

Trump’s own administration says we have a trade surplus with Canada..

 

Trump suggests NHL owner could help him with NAFTA negotiations

President Trump suggested on Tuesday that Ron Burkle, a co-owner of the Pittsburgh Penguins NHL team, could help his administration renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Trump during a White House visit by the Stanley Cup championship team praised Burkle’s negotiating abilities, and suggested that the billionaire investor could play a role in NAFTA discussions.

“Ron, how about negotiating some of our horrible trade deals that they’ve made?” Trump asked. “Here’s what I want, I want to get him. Oh, I would love to have Ron Burkle.

“And it’s great to have you Ron. But I really mean that, if you want to get involved in negotiating NAFTA, I like it. Because we’re renegotiating NAFTA, Ron.”

“Of course, he may not like that, because maybe he’s on the other side,” Trump added. “You’re not on the other side of NAFTA, Ron, are you?”

Burkle could be heard responding: “I am not.”

Trump has railed against international trade deals, like NAFTA, as “unfair” to the U.S. and has vowed to renegotiate them.

Canadian Prime Minister Justin Trudeau is set to visit Washington on Wednesday — a trip that will overlap with the fourth round of NAFTA negotiations.

Trump has signaled more recently that he’s leaning toward scrapping the trade deal altogether, telling Forbes in an interview published Tuesday that “NAFTA will have to be terminated if we’re going to make it good.”

[The Hill]

 

Trump preparing withdrawal from South Korea trade deal

President Trump has instructed advisers to prepare a withdrawal from the United States’ free-trade agreement with South Korea, several people close to the process said, a move that would stoke economic tensions with the U.S. ally at a time both countries confront a crisis over North Korea’s nuclear weapons program.

While it is still possible Trump could decide to stay in the agreement in order to renegotiate its terms, the internal preparations for terminating the deal are far along and the formal withdrawal process could begin as soon as this coming week, said the people, who spoke on condition of anonymity.

A number of senior White House officials are trying to prevent Trump from withdrawing from the agreement, including national security adviser H.R. McMaster, Defense Secretary Jim Mattis, and National Economic Council Director Gary Cohn, these people said.

A White House spokeswoman said “discussions are ongoing, but we have no announcements at this time.”

South Korea elected a new president, Moon Jae-in, in May, and Trump has been frustrated that Moon is not willing to accept the initial U.S. trade demands, several trade experts said. Foreign leaders at first worked hard to try and build strong relations with Trump, but there has been a marked change in recent months with numerous leaders standing up to his brand of nationalism.

Trump is “playing with fire,” said Gary Schmitt, co-director of the Marilyn Ware Center for Security Studies at the American Enterprise Institute. “There is a new president in South Korea whose instincts probably are to be probably not as pro-America as his predecessor and now you are putting him in situation where he has to react. In fact, what you need now is as much cooperation as possible.”

One reason top White House advisers are trying to stop Trump from withdrawing from the South Korea free trade agreement is because they do not want to isolate the government in Seoul at a time when North Korea has become increasingly adversarial with its missile program, testing nuclear weapons and firing missiles over Japan in a way that has alarmed the international community.

If Trump withdraws from the agreement, he could try to force South Korea to import more U.S. products with little to no import restrictions, something he believes will help U.S. companies and workers. South Korea could also decide to refuse any discussions with Trump, kicking off a trade war between the countries.

The trade agreement was signed in 2007 and went into effect in 2012.

Withdrawing from the deal could lead to a large increase on tariffs levied against products the United States imports from South Korea, such as electronics, cellphones and automobiles. South Korea would also immediately start charging very high tariffs on goods and services imported into its country. Chad Bown, who served as an economist in the White House during the Obama administration, said the tariff the U.S. government charges against many Korean imports would rise from 0 to 3.5 percent. The tariff South Korea charges against U.S. imports would rise from 0 to almost 14 percent, potentially making it harder for U.S. companies to find buyers there.

Trump’s consideration of starting the process of pulling out of the deal was first reported by Inside U.S. Trade.

In July, U.S. Trade Representative Robert E. Lighthizer revealed some of Trump’s complaints with the South Korea deal during a “special session” that was called in an attempt by the White House to begin renegotiations.

Lighthizer said at the time that since 2012, the U.S. “trade deficit in goods with Korea has doubled from $13.2 billion to $27.6 billion, while U.S. goods exports have actually gone down. This is quite different from what the previous Administration sold to the American people when it urged approval of this Agreement. We can and must do better.”

South Korea, though, has so far refused to renegotiate the trade deal.

In an April interview with the Washington Post, Trump called the U.S.’s trade agreement with South Korea “a horrible deal” that has left America “destroyed.”

“With the Korean deal, we terminate and it’s over,” Trump told the Washington Post in that interview.

Trump added: “I will do that unless we make a fair deal. We’re getting destroyed in Korea.”

Trump has expressed widespread frustration that he has not been able to follow through on campaign promises to rip up trade deals that he argues have disadvantaged U.S. workers. He came close several months ago to starting a withdrawal from the North American Free Trade Agreement, but he stopped short after intense lobbying by advisers and the business community.

But in recent days he has said he might still withdraw from NAFTA, accusing Mexico in particular of refraining to offer concessions during negotiations.

South Korea is the sixth-largest goods trading partner with the United States, accounting for $112.2 billion in two-way trade last year, according to the U.S. trade representative. U.S. companies exported $42.3 billion in goods to South Korea and imported $69.9 billion in goods last year, leaving a trade deficit of $27.7 billion.

Trump has said many countries that export more goods to the United States than they import are fleecing U.S. workers and consumers.

The U.S.-South Korea free-trade agreement, known as KORUS, allows the United States to terminate it after six months if it wishes to. So if Trump signed a letter to withdraw from the agreement, the deal would effectively be terminated in March 2018. KORUS was approved by Congress, but Trump could to pull out of the agreement on his own.

[Washington Post]

Trump Demands China Action: ‘I Want Tariffs. And I Want Someone to Bring Me Some Tariffs’

President Donald Trump recently dismissed some of his senior staff as globalists and demanded that someone draw up a plan for tariffs that would affect China, Axios reported Sunday evening.

Citing multiple sources with knowledge of the meeting — and noting that the White House had not disputed the accounts —the outlet reported that Trump had issued the demand during an Oval Office meeting with top advisors.

“So, John, I want you to know, this is my view. I want tariffs. And I want someone to bring me some tariffs,” Axios quotes the president as saying to John Kelly, his chief of staff.

Trump then reportedly ended his meeting by saying: “I know there are some people in the room right now that are upset. I know there are some globalists in the room right now. And they don’t want them, John, they don’t want the tariffs. But I’m telling you, I want tariffs.”

People in the meeting — which was set to be about plans to investigate China for intellectual property theft — included U.S. Trade Representative Robert Lighthizer, trade advisor Peter Navarro, National Economic Council Director Gary Cohn and then-White House chief strategist Steve Bannon, according to Axios.

Here’s the non-denial that the White House gave to Axios: “The president has been very clear about his agenda as it relates to trade. Discussions pertaining to specific tariffs and trade deals are ongoing and have already resulted in many positive developments.”

[CNBC]

Trump Fires Back at Merkel, Says Germany is ‘Very Bad’ For The US

President Donald Trump has criticized Germany once again for its large trade surplus with the U.S. and its low contributions to NATO, saying this attitude is “very bad” for the United States.

The comments made on Twitter take current tensions in U.S.-German relations a notch higher.

Chancellor Angela Merkel said at an election rally on Sunday that Germany and the European Union can no longer rely on the United States.

“The times in which we could completely depend on others are, to a certain extent, over,” she told the rally in Munich.

“I’ve experienced that in the last few days. We Europeans truly have to take our fate into our own hands,” she said. Her comments came as she steps up her campaign in the September federal election.

The image of friendly relations between Germany and the U.S. seems distant since Trump took office. His administration has previously said that Germany’s trade surplus is a result of the country’s manipulation of the euro.

Germany fought back arguing that it doesn’t have powers to manipulate the euro and the only reason consumers opt for its products is because they are more competitive.

Data released last February by the German Federal Statistics Office showed that Germany’s trade surplus rose to 252.9 billion euros ($270.05 billion) in 2016, surpassing the previous high of 244.3 billion euros in 2015. If it were a single trade partner, Germany would be the fifth largest in total trade flows with the U.S. But it runs the third largest trade surplus, after China and Japan.

Meanwhile, contributions to the defense alliance NATO has emerged as another problem between Berlin and Washington. Trump has repeatedly asked NATO allies to step up their contributions. At the moment, only 5 of the 28 members fulfill the target of paying at least 2 percent of their gross domestic product on defense.

According to NATO data, Germany is currently spending 1.2 percent of its GDP on NATO. The U.S. spends 3.6 percent.

At a summit last week, Germany, like other NATO members, vowed to present an action plan on how it will increase defense spending. At the time, Trump told his allies they were being unfair toward U.S. taxpayers.

[CNBC]

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