Source: Global Times Published: 2018-3-7
US President Donald Trump`s call for tariffs on steel and aluminum imports as well as his rhetoric about the need for such a move has triggered threats of tit-for-tat retaliation measures from the EU, Canada, Mexico and Brazil, sparking growing concerns that a full-blown global trade war could be coming.
If Trump presses ahead with his plan, thousands of US jobs would be put at risk and US consumers would face soaring prices, and in global terms, trade barriers might be erected around the world, potentially leading to a new recession, industry insiders warned.
He Weiwen, an executive council member at the China Society for the WTO, told the Global Times that the products currently involved in US trade measures would lead to "just a limited trade war," but retaliatory counter-measures by the US` trade partners could lead to a more profound trade war in the near future.
Trump announced on March 1 that his administration planned to slap duties of 25 percent on imports of steel and 10 percent on aluminum.
The EU is reportedly considering a 25 percent levy on a range of consumer, agricultural and steel products imported from the US that could be valued at 2.8 billion euros ($3.47 billion) to offset US measures, Bloomberg reported on Tuesday.
Other countries also reacted angrily. Canadian Prime Minister Justin Trudeau described Trump`s plan as "absolutely unacceptable," and Chrystia Freeland, the country`s foreign minister, has threatened "responsive measures," CNBC reported on Monday.
Mexico and Brazil also said they were weighing up retaliatory steps, the BBC reported.
These are just the start of a batch of retaliatory measures, and they are justified based on the WTO`s dispute settlement mechanism, experts said.
Under WTO rules, trading partners would be allowed to retaliate against the US by a collective amount of $14.2 billion per year, according to a report from the Washington-based Peterson Institute for International Economics.
In 2017, steel imported into the US was valued at just over $29 billion.
"Retaliatory tariffs would potentially curb US exports, and a 4 percent drop in US import value would translate to a 6 percent decline in its export value, which goes against Trump`s focus on correcting the trade imbalance," He Weiwen said, adding that the US would be the one hurt most by an escalating trade conflict.
Higher prices of steel and aluminum imports would impact downstream US industries such as auto manufacturing, energy and construction, which provide 9.6 million jobs, and the tariffs would also push up local prices for consumers, experts said.
Bloomberg reported on Wednesday that the Trump administration is also considering clamping down on Chinese investment in the US and imposing tariffs on a broad range of exports from China.
Hu Yifan, chief China economist with UBS Wealth Management, said in a telephone interview with the Global Times on Wednesday that if the US continues to push, China may respond by imposing tariffs on agricultural and energy products as well as aircraft imported from the US.
"In particular, China may take action in services, a sector in which the US has maintained a surplus against China," Hu said, noting that US financial institutions` business in the Chinese market would be impacted as well.
If a trade war broke out, it would be "out of everyone`s control," He warned.
The WTO, in a rare case, condemned Trump`s proposed tariffs.
"An eye for an eye will leave us all blind, and the world in deep recession," WTO Director-General Roberto Azevedo said Monday. "We must make every effort to avoid the fall of the first dominoes."
In a sign of rising global tension over steel trade, the EU on Wednesday announced a decision to extend anti-dumping duties of between 48.3 and 71.9 percent on stainless steel pipe imports from China for a further five years, Reuters reported.
China, US aim to avoid trade war: Chinese official
Liu He, director of the General Office of the Central Leading Group for Financial and Economic Affairs and also a deputy to the ongoing National People`s Congress, said on Wednesday that he talked with US officials in an "open and constructive" way during his five-day visit to the US from February 27 to Saturday.
"Both countries have agreed it would be better not to start a trade war, and we will communicate and negotiate further to boost bilateral cooperation," Liu was quoted as saying by a Securities Times report on Wednesday.
He Weiwen is a senior fellow of Chongyang Institute for Financial Studies, Renmin University of China.