US levies steel, aluminum tariffs on allies, risks trade war

Posted May 31, 2018

Not even the US's closest allies can avoid getting caught in President Donald Trump's escalating trade battles.

The Trump administration ratcheted up the brinkmanship Thursday by announcing new duties on steel and aluminum imports from the European Union, Canada and Mexico - after failing to reach deals with them to address national security concerns related to the imports.

And despite the picking and choosing of which allies that the USA decides to slap with these tariffs, Ross defended the US legal justification that they are being implemented under law meant to protect US national security. "There is money set aside whether it be for tariffs, or for interest rate fluctuations, so that we can proceed with our defence procurement should there be additional costs associated because of tariffs or other unexpected circumstances", she said.

"Mexico reiterates its openness to constructive dialogue with the United States, its support for the global commerce system and its rejection of unilateral protectionist measures", it said.

Steel and aluminum stocks surged initially, but pared gains.

"The steel and aluminum tariffs will have a poisonous effect on the NAFTA negotiations", Alden said.

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Although the USA market amounts to a low single-digit percentage of German steel industry output, German politicians and industry groups have said they are concerned that tit-for-tat measures could end in damaging tariffs on foreign automobiles, an outcome that Trump has repeatedly threatened.

Canada, Mexico and the European Union were among the countries granted relief while the United States pursued negotiations to address the administration's concerns about the state of domestic steel and aluminum production. Both parties had previously said that tariffs would be put on hold as talks continued.

The Trump administration announced Thursday it will impose tariffs on steel and aluminum imports from Europe, Mexico and Canada after failing to win concessions from the American allies.

European leaders have declared a "bad day for world trade" after the U.S. announced it will impose tariffs on metal imports from the EU.

Trump imposed the steel and aluminum penalties under a 1962 law that gives the president broad power to increase or reduce tariffs on goods deemed critical to national security.

Secretary Ross made it clear thta restructuring tariffs on USA goods is a high priority for the Trump administration.

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The United States negotiated voluntary export limits with several other friendly nations, including South Korea, Argentina, Australia and Brazil.

Ross told a conference call with media this morning that he is looking forward to continuing negotiations.

Mexico has also announced retaliatory tariffs on United States imports including pork bellies, apples, grapes, cheese and flat steel, according to a statement from Mexico's Economy Ministry.

Such an action could hurt Mexico, Canada, Germany and Japan.

Yet Canada is also, far and away, the largest export market for USA steelmakers.

Ross said the US would consider the effect of those measures.

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"Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States", Freeland told reporters Wednesday.