Trump vows flexibility with friends of US amid tariff row

SENDING A MESSAGE: We want Congress to understand that this would be a lose-lose situation. - EUROPEAN FINANCIAL AFFAIRS COMMISSIONER PIERRE MOSCOVICI
SENDING A MESSAGE: We want Congress to understand that this would be a lose-lose situation. - EUROPEAN FINANCIAL AFFAIRS COMMISSIONER PIERRE MOSCOVICI

Trade war warnings escalate ahead of US President's signing of proclamation to impose import levies

WASHINGTON/PARIS/BEIJING • President Donald Trump has promised to show great flexibility and cooperation towards the United States' "real friends" as he prepared to impose import tariffs that have provoked warnings of a trade war from Europe and China.

Mr Trump had been expected later yesterday to sign a proclamation imposing 25 per cent tariffs on steel imports and 10 per cent on aluminium, but this could slide into today.

A White House official also said on Wednesday night that Mr Trump planned to offer Canada and Mexico - fellow signatories of the North America Free Trade Agreement (Nafta) - the possibility of a 30-day exemption from the tariffs.

But both Brussels and Beijing made clear they were ready for any trade war, with one European Union official saying retaliation could also target goods from areas governed by Trump's Republican Party.

Mr Trump tweeted that he was looking forward to a meeting at the White House. He did not say whether he would sign the proclamation then.

However, he added: "We have to protect & build our Steel and Aluminum Industries while at the same time showing great flexibility and cooperation toward those that are real... and treat us fairly on both trade and the military."

Mr Trump did not name the countries he regarded as friends, or say what he had in mind for them. However, he has argued that the tariffs would counter cheap imports, especially from China, which he says are undermining US industries and jobs.

The European Commission raised the prospect that Mr Trump could also consider exempting the EU's 28 member states.

Some countries advised against any over-hasty reaction to Mr Trump's tariff plan, which has drawn fire at home as well as rattled global financial markets, particularly Canada which as a close trading partner of the US has perhaps most to lose.

But the EU talked tough.

"If Donald Trump puts in place the measures this evening, we have a whole arsenal at our disposal with which to respond," European Financial Affairs Commissioner Pierre Moscovici said.

Counter-measures would include European tariffs on US oranges, tobacco and bourbon, he said, adding that some products under consideration for an EU riposte were largely produced in constituencies controlled by Mr Trump's Republicans.

"We want Congress to understand that this would be a lose-lose situation," Mr Moscovici told BFM TV.

The EU is by far the biggest trading partner of the US by value and, after China, member states have together the biggest trade surplus with the country.

Once approved by Mr Trump, the tariffs would go into effect after two months.

In Beijing, Foreign Minister Wang Yi said history showed that trade wars were not the correct way to resolve problems.

"Especially given today's globalisation, choosing a trade war is a mistaken prescription. The outcome will only be harmful," he said on the sidelines of an annual meeting of China's Parliament.

"China would have to make a justified and necessary response."

China had a record US$375.2 billion (S$494 billion) goods surplus with the US last year.

Trade tensions between the world's two largest economies have risen since Mr Trump took office last year, and although China accounts for only a small fraction of US steel imports, its massive industry expansion has helped create a global glut of steel that has driven down prices.

REUTERS

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A version of this article appeared in the print edition of The Straits Times on March 09, 2018, with the headline 'Trump vows flexibility with friends of US amid tariff row'. Print Edition | Subscribe