Canada, Mexico, and European Union vow swift retaliation for Trump's tariffs

Trump Slaps Steel and Aluminum Tariffs on the E.U., Canada, and Mexico

The announcement Friday morning (AEST) reignited investor fears of a global trade war as Washington's allies took steps to retaliate against American goods.

French President Emmanuel Macron on Thursday said he "deplored" the United States move to impose harsh tariffs on steel and aluminium imports from the European Union, declaring it an "illegal" decision. Tariffs are easy to apply, especially if you disregard treaty obligations; they can be created to appease domestic constituencies and inflict maximum pain on foreign trading partners.

For a country like Canada, "this is big trouble", according to Peter Warrian, a steel expert at the University of Toronto.

Ross downplayed the threat of a trade war, calling the changes mere "blips on the radar" in an interview with broadcaster CNBC.

Although the US has said the tariffs are being applied for national security reasons, the economy secretary argued that steel and aluminum are integral supplies in highly integrated strategic sectors of the North American economy, such as the automotive, aerospace, electric and electronic industries.

Ildefonso Guajardo pointed out in an interview today that Mexico actually buys more US steel than it exports to that country. He estimated the USA tariffs would affect $4 billion in trade between the two countries. About one-sixth of that comes from Canada. Earlier this week, there were reports that the talks might be canceled following Trump's renewed threat to impose import taxes on $50 billion in Chinese products.

Canada and Mexico, embroiled in talks with the United States to modernise the North American Free Trade Agreement (Nafta), responded swiftly.

Freeland noted that the United States has a US$2 billion trade surplus with Canada in steel, and that "roughly half" of all USA steel exports go to Canada. The US accounts for 90 percent of Canada's steel exports, however. Dissatisfied with the negotiations, Trump lifted the exemptions, in a move likely to provoke counteraction from trade allies.

"You can't turn them on and off like a light switch", Warrian said.

Macron, who has forged a good relationship with the U.S. president, spoke to Trump on the phone, urging him to take part in negotiations with the EU, China and Japan to strengthen the rules of the World Trade Organisation. "The data that was presented to Trump by the Department Of Commerce was incompetent".

"That's the law of gravity".

Another Ontario city expecting to be impacted by the US tariffs is Sault Ste. Patrick Toomey, R-Pa. "In addition to higher prices, these tariffs invite retaliation".

He signed-off the new tariffs surrounded by United States steel workers who are supportive of his decision.

"All three countries need to go back to their legislatures or parliaments to say, 'we have got benefits out of this deal, '" he said. "There's going to be people who are hurt and people who are not".

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But such dire predictions are far from universal.

Beatty said future negotiations have been altered by Trump's "classic bully techniques" which are designed "to extort the conditions that Donald Trump wants to see in NAFTA".

He cited the long-running softwood lumber dispute.

Fox, one of the leading voices in support of Brexit, said the "mechanism chosen by the USA is utterly inappropriate and using national security pretext for what is actually protectionism". "They just pay more for it".

Alliance for American Manufacturing President Scott Paul said the steel and aluminum tariffs helped preserve the estimated two million jobs supported by the American steel industry.

"This decision is not in line with worldwide trade law, so it is illegal", he said. But companies in the United States that use imported steel will face higher costs.

Closer to home, Trump is also facing criticism from Republicans, including their leader in the House of Representatives, Paul Ryan.

Businesses often complain about trade barriers even between provinces.

"If that's the conversation that starts, there's another benefit that happens", he said.

Secondly, with the U.S. not only closing its doors to Europe but doing so in a manner not befitting of an "ally", the European Union may soon realise that dealing with China is in fact easier to deal with in the long term than the more historically familiar United States.

Part of the uncertainty stems from the fact that it's not known what retaliatory penalties will be coming.

EU members have given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of U.S. exports if Washington ends tariff exemptions.

"Mexico has stated repeatedly that this type of measure, based on national security, is neither appropriate nor justified".

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