U.S. trade action risks alienating key allies

Although Trump’s ‘America First’ policy looks good on paper, the way it is being implemented could see more than 2 million jobs being lost n the very states that voted for Trump and his candidates.

Following the imposition of stiff penalties on aluminum and steel by the United States and the subsequent retaliation by Canada and Mexico, fears of a global trade wars have once again gained investor’s attention.

Early on Friday, German Economic Minister Peter Altmaier stated, the European Union could consider a coordinated response with Canada and Mexico.

The tariffs, announced by U.S. Commerce Secretary Wilbur Ross, ended months of uncertainty and suggests a hardening U.S. approach to trade negotiations.

Tariff Wars

Incidentally, the trade related measures touted by U.S President Donald Trump in March 2018, drew widespread condemnation from Republican and Democratic lawmakers as well as from the country’s main business lobbying group. It took a toll on financial markets across the globe as well.

“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,” said Ross.

“We want open markets, free markets but we have to convince the U.S. administration,” said Germany’s Altmaier to German television. “We tried to do it through negotiation and we will now do it by standing together and formulating a common European answer, possibly working more closely with Mexico and Canada”.

Incidentally, Canada, the biggest supplier of steel to the U.S. stated it will impose tariffs that cover at least $12.8 billion (C$16.6 billion) imports from the U.S. These U.S. imports into Canada include whiskey, steel, orange juice, aluminum and other products, said Canadian Foreign Minister Chrystia Freeland.

“The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must,” said Canadian Prime Minister Justin Trudeau.

Late on Thursday, Trump issued a statement saying, “The United State will agree to a fair deal, or there will be no deal at all”.

Mexico also announced “equivalent” measures on wide ranging U.S. farm and industrial products. The Mexican measures targets, Apples, Cheese, steel, pork legs and other products.

Mexican Economic Minister Ildefonso Guajardo stated, the measures will be in place till the U.S. government eliminates its tariffs on Mexico’s exports to the U.S.

The European Union has threatened to impose tariffs on Harley Davidson motorcycles and bourbon, items that are made in the political bases of U.S. Republican legislators.

Members from the Eurozone have provided broad support to a European Commission plan to impose duties on $3.4 billion (2.8 billion euros) U.S. exports to the EU. EU exports that are potentially subject to U.S. duties are worth $7.5 billion (6.4 billion euros).

“It’s entirely up to U.S authorities whether they want to enter into a trade conflict with their biggest partner, Europe,” said French Finance Minister, Bruno Le Maire, having had a meeting with Ross on Thursday.

In a letter that warns of the potential consequences of the U.S. trigerred trade wars, Tom Donohue President of the U.S. Chamber of Commerce stated, current trade policies could threaten U.S> “economic progress” and cause the loss of more than 2 million jobs, mostly in states that voted for Trump and Republican candidates.

The tariffs imposed by the U.S. are “an integral part of Trump’s effort to protect U.S. industry and workers from what he described as unfair international competition, a key theme of his “America First” agenda”.


According to Eswar Prasad, former head of the International Monetary Fund’s China division who is now a professor at Cornell University, “The Trump administration seems to regard overt threats, including tariffs and repudiation of previous agreements, as a key element for gaining leverage in trade negotiations”.

The U.S. move against China is aimed at forcing it to change its key economic and trade policies; however the way it is going about achieving this target is at the cost of alienating its key allies.

Further, the Trump administration has also demanded that Beijing stop forcing U.S. companies to hand over proprietary technology to their Chinese partners, which essentially amounts to stealing U.S. know-how and has threatened to impose tariffs on $50 billion Chinese exports to the U.S.

Given China’s massive trade surplus with the U.S., Chinese exports face significant risks, however, U.S. companies make substantial sales in China, which could be also trend downwards.


Categories: Creativity, Economy & Finance, Entrepreneurship, Geopolitics, HR & Organization, Regulations & Legal, Strategy

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