Trump’s Tariffs Prompt Global Threats of Retaliation
“It certainly will have a negative effect on our bilateral relationship,” he said.
American businesses are more tied to the global economy than ever before, and the Trump administration is seeking concessions from trading partners to put American companies on a more competitive footing. Negotiators from Canada, Mexico and the United States were meeting in Mexico City to hash out changes to Nafta, and Washington is trying to revise a trade deal with South Korea. The possibility of tariffs complicates both efforts.
Mr. Trump appeared unmoved by the blowback, posting a series of Twitter messages on Friday defending his proposal to impose tariffs of 25 percent on steel and 10 percent on aluminum.
“We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” Mr. Trump tweeted.
Yet the United States does not control the global economy, and the tariffs, which Mr. Trump is expected to sign next week, could incite other countries to challenge it at the World Trade Organization. If the organization rules against the United States, that will test the Trump administration’s willingness to follow global trade rules.
The tariffs rest on a little-used legal provision that allows Mr. Trump to restrict imports to try to bolster the American industrial base in the interest of national security. That power will face scrutiny by the World Trade Organization but, perhaps more significant, could prompt other countries to follow suit in using national security as a reason to wall off their markets.
American technology companies, agricultural producers and other industries could ultimately lose business abroad as nations seek to erect similar barriers.
Robert L. Shanks, Ford Motor’s chief financial officer, said commodities markets had already started to price in increases for steel and aluminum on the expectation that Mr. Trump would impose the tariffs. The effect on Ford, he said, is “not positive” given the automaker uses those metals in the cars they produce.
The European Union detailed a three-step plan to penalize $3.5 billion of American trade — the same amount of European steel and aluminum the bloc estimates would be harmed by the planned tariffs. It proposed taxing American exports including bourbon, bluejeans, orange juice, cranberries, rice and motorcycles. The European Union could then take action to protect their own metal makers from a surge in imports, and bring a case against the United States at the World Trade Organization.