Trump opens up 2 new fronts in global trade war

Brazil, Argentina facing tariffs on industrial metals while popular French goods like cheese will be subject to levy

WASHINGTON • US President Donald Trump has revved up his global trade war on two fronts, announcing tariffs on industrial metals from Brazil and Argentina while eyeing tariffs of up to 100 per cent on dozens of popular French products.

The administration said the moves were necessary because US trading partners were acting unfairly to disadvantage both the country's traditional economic pillars as well as its best hopes for future prosperity.

In a pre-dawn tweet on Monday, Mr Trump said he was ordering new tariffs on steel and aluminium from Brazil and Argentina to counter what he called a "massive devaluation of their currencies" at the expense of American farmers.

The unexpected announcement upends the Latin American countries' 2018 agreement with Mr Trump to accept quotas on their shipments to the United States in place of the import taxes.

Hours later, Mr Robert Lighthizer, the President's chief trade negotiator, released the results of a five-month investigation that concluded a French digital services tax discriminated against American Internet companies and should be met with tariffs of up to 100 per cent on US$2.4 billion (S$3.3 billion) in products such as cheese, yoghurt, sparkling wine and cosmetics.

The proposal threatens to intensify simmering transatlantic trade friction, coming with Mr Trump already accusing European carmakers of enjoying government protection from American competition.

"They're starting to tax other people's products so, therefore, we go and tax them," Mr Trump said yesterday, ahead of a Nato summit in London.

France's Finance Minister Bruno Le Maire has threatened a "strong European riposte" if the Trump administration followed through on its threat.

Mr Le Maire said France had spoken with the European Commission about EU-wide retaliatory measures and that the French tax did not discriminate against American companies.

"In case of new American sanctions, the European Union would be ready to retaliate," Mr Le Maire told Radio Classique.

At issue is a 3 per cent tax France introduced last year. French lawmakers call the levy "Les Gafa" - an acronym for Google, Amazon, Facebook and Apple. These are companies that French officials say should be paying their fair share of taxes in countries where they make money.

US administration officials worry that the French tax could set a precedent for other countries.

Meanwhile, ahead of talks with French President Emmanuel Macron on the sidelines of the Nato summit yesterday, Mr Trump offered a glimmer of hope and said it should be possible to rapidly resolve his trade spat with Paris.

"We do a lot of trade with France and we have a minor dispute," said Mr Trump. "I think we'll probably be able to work it out but we have a big trade relationship and I'm sure that within a short period of time things will be looking very rosy."

Mr Trump's action against Brazil and Argentina took officials in both countries by surprise.

Typically, the US provides businesses with some warning of tariff changes, delaying their effective date to allow goods in transit to arrive at American ports without being taxed. But the President tweeted that his tariff order was "effective immediately".

Monday's protectionist flurry came as Mr Trump's "America First" trade policy remains bogged down at the negotiating table and on Capitol Hill, less than a year before next year's election.

WASHINGTON POST, REUTERS, BLOOMBERG, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on December 04, 2019, with the headline 'Trump opens up 2 new fronts in global trade war'. Print Edition | Subscribe