Trade War Emerges after U.S. Hits Nations with Steel & Aluminum Tariffs
The Trump administration made a bold move last week on Thursday when they imposed tariffs on steel and aluminum imports from nations in the European Union, Canada, and Mexico. The news was met with absolute outrage from some of the nation’s closest allies and a handy number of trading partners. Analysts believe that the move could spark a ricochet effect where U.S. consumers are charged more on items like canned soup to cars.
In particular, Justin Trudeau, the Canadia Prime Minister didn’t mince any words. He labeled the tariffs as punitive and “totally unacceptable”, and “an affront’. He proceeded to mention that the very idea Canada could be considered as a national security threat to the United States was “inconceivable.”
In retaliation, Chrystia Freeland proceeded to announce $12.8 billion tariffs which she described as being “the strongest trade action Canada has taken in the post-war era.” The European Union promised to seek legal intervention on the matter while Mexico mentioned that they would be looking to impose tariffs to deal with the issue.
In a phone call to reporters, Wilbur Ross, the U.S. Commerce Secretary confirmed that the White House was seeking to add 25 percent of import tariff on steel and 10 percent tariff on aluminum following the crumbling of trade talks prior to the set June 1 deadline that would have facilitated exemptions.
One the markets got wind of the situation, they responded accordingly. The Dow Jones sharply decline once the move was made public and stooped by about 250 points as more investors took note of the impact of proceeding trade tensions. Once Canada announced that they were retaliating, the nosedive proceeded to about 300 points.
In a lawsuit filed after the White House made public its trade decision, the European Commission mentioned that the E.U. “stands now ready to react to the U.S. trade restrictions on steel and aluminum in a swift, firm, proportionate and fully WTO-compatible manner,” when referring to the World Trade Organization. Afterward, the European Union promised to launch legal proceedings directed against the U.S. in the W.T.O on Friday. They also mentioned that the level of traffics applied would reflect the damage initiated by the latest U.S. trade restrictions.
Mexico released a statement through their Ministry of Economy and pointed out that, “Mexico deeply regrets and rejects the decision of the United States to impose these tariffs on imports of steel and aluminum from Mexico as of June 1, under the criterion of national security. Mexico will impose equivalent measures to various products in the face of U.S. protectionist measures.”
Trudeau labeled the tariffs as totally unacceptable and proceeded to point out that, “Over the past 150 years, Canada has been America’s most steadfast ally. These tariffs are an affront to the long-standing security partnership between Canada and the United States, and in particular, to the thousands of Canadians who have fought and died alongside American comrades-in-arms.”
In retaliation, Canada is expected to levy “dollar-for-dollar” tariffs from July 1 on an assortment of American-made goods. The announcement made by Freeland made it public that the government had come up with two lists of products that would be subject to either 25 percent or 10 percent taxation, i.e. until the United States changed their stance on the matter.
Robert Scott, a renowned economist at the Economic Policy Institute shared his take on the newly imposed tariffs. He mentioned that since the tariffs failed to make a distinction between America’s trade allies and other nations like China, which the U.S. has previously accused of illegal trade practices, trade disputes in future will likely be harder to resolve.
His sentiments were echoed by Dan North, chief economist at Euler Hermes North America who pointed out that the overall concept of imposing tariffs to aid the steel and aluminum industries as being misguided since it could potentially lead to a rapid decline in general economic activity.
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