March 23, 2018

Trump exposes free trade as a failed policy for Canada

14 March 2018, 09:57 | Taylor George

Disastrous impact

UPDATE 1-Canada's Trudeau tells metal workers 'we have your backs'

Speaking on German television shortly after Mr Trump's trade war tweet was posted, he said: "If the Americans impose tariffs on steel and aluminium, then we must treat American products the same way".

"As I said to the congressional leadership, as I said to the president last week: We are always happy to better co-ordinate and to work together to do even more to ensure that we are protecting the North American steel industry". He said "This week, I will travel across Canada to meet with the workers and businesses at the heart of our country's world-class steel and aluminum industries". "We will continue working toward securing a definite and permanent exemption from those tariffs", Trudeau said earlier. If U.S. Steel restarts part of its plant in Granite City, Ill., which has been out of commission for more than two years, the company could hire 500 workers.

The new tariffs, signed into law on Thursday and going into effect about 10 days from now, impose a broad 25% tariff on steel imported from nearly anywhere on the globe (and 10% tariffs on aluminum, too).

That is where President Trump's complaint is right.

While Trump has called China "helpful" in dealing with North Korea, his 2016 campaign focused on pulling out of worldwide trade deals that he sees as detrimental to US interests. "It will cost consumers millions of dollars for each job saved in aluminum or steel production - a genuinely stupid and counterproductive policy".

Vertical Group announced a big downgrade of U.S. Steel stock from hold to sell this morning, reports (subscription required).

But in wartime, aluminum and steel are essential to make tanks, planes and other weapons. Tariffs raise the price of, and reduce demand for, imported goods.

The Commission said it expected to be in contact with Washington over the metals tariffs this week, but that no formal talks had been scheduled. "Consumers are just beginning to see more money in their paychecks following tax reform, but those gains will soon be offset by higher prices for products ranging from canned goods to cars to electronics". On the flip side, it doesn't take much time and effort to destroy everything, Huang stressed.

Trump's fixation on the trade deficit is overdone. Sen. Their reach is in almost every sector of the USA economy - and that gives the tariffs a wide and worrying reach. "It is bad for European citizens, for Dutch citizens and it will turn out bad for USA citizens as well".

Washington's move to target Chinese firms comes amid allegations of intellectual property theft.

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"These measures could make a significant impact on the economic and cooperative relationship between Japan and the US, who are allies", said Japan's foreign minister, Taro Kono.

In the USA market, sales of Chinese steel have plunged due to earlier tariffs of up to 522 per cent imposed on some products to offset what Washington says are improper subsidies to producers.

As many as 107 House Republicans expressed deep concerns last week, writing in an open letter to the president that the "new taxes in the form of broad tariffs would undermine" the "remarkable progress" made by the tax overhaul.

The market's reaction to Tillerson was muted, certainly not as dramatic as the drop that immediately followed the resignation of National Economic Adviser Gary Cohn, who failed to get Trump to reconsider the tariffs. Pain which does not improve the economy is hard to justify.

"However a formerly unreported February 27 letter sent to Trump by the American Automotive Policy Council, representing General Motors, Ford Motor and Fiat Chrysler Automobiles, cautioned that the metals tariffs" will include significant additional costs to the United States automobile industry each year". Executives from both U.S. Steel and Nucor, who had flanked Trump at the White House signing ceremony, wasted no time in lauding the tariffs and their authorization. And here "China is the elephant in the room" - an issue not addressed directly by Nafta, or even the steel duties given the US's comparatively low level of Chinese steel imports.

Later, at a roundtable with industry leaders, he spoke again of the importance of steel to Hamilton, saying he was there to listen.

In addition to intellectual property infringements such as counterfeiting, Washington takes issue with Chinese investment rules that force USA companies to transfer proprietary technology to do business in the country. The construction industry would take the biggest hit.

If other countries retaliate against the US tariffs, escalating barriers to trade could hurt economies around the world through higher prices and slower growth.

Canada is the largest supplier of steel and aluminum to the US.

"There are no winners in a trade war", Mr Zhong said.

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