European Union to respond to USA tariffs within 90 days if not exempt

Donald Trump

US president Donald Trump

His move, an assertive step for his "America First" agenda, has rattled allies across the globe and raised questions at home about whether protectionism will impede USA economic growth.

"Working very quickly on a security agreement so we don't have to impose steel or aluminium tariffs on our ally, the great nation of Australia!" he tweeted. "The EU must not allow the moderate recovery in our industry over the previous year to be destroyed by the EU's most important ally", said a Tata Steel Europe spokesperson at the time.

Trump cited national security concerns as his reason for imposing a 25 percent tax on USA steel imports and a 10 percent tax on aluminum imports, saying that imports are "killing" the US steel and aluminum industries and a nation that wants to defend itself must have a viable metals sector capable of supplying weapons manufacturers. "I do think the possibility of NAFTA partners walking away from the table mattered quite a bit", the lobbyist said. "We have to chose whether we want rules-based trade. or whether we want the rule of force, the rule of the strongest, which we have now seen".

Data released Wednesday showed the USA foreign trade deficit widened in January to its highest level in nine years - heaping pressure on Trump, who had campaigned on a promise to reverse that trend. Harley Davidson Inc motorcycles have also been mentioned, targeting House of Representatives Speaker Paul Ryan's home state of Wisconsin.

"Our Granite City Works facility and employees, as well as the surrounding community, have suffered too long from the unending waves of unfairly traded steel products that have flooded U.S. markets", said David B. Burritt, president and CEO of U.S. Steel.

Industry groups like the automotive, construction, manufacturing, aerospace and beverage industries, are already warning about higher prices and potentially thousands of job losses.

There are about 16 times more workers in steel-consuming industries, such as construction, oil and gas exploration and manufacturing, than there are employed by US steel makers.

Also, our national security interests are inextricably intertwined with a unique defense and intelligence relationship.

First off, tariffs raise the prices of goods that consumers ultimately buy.

Stocks ended the day higher after the announcement, with investors relieved by the carved out exceptions for key allies.

The White House had punted Wednesday on the timetable, with Press Secretary Sarah Sanders telling reporters that he was expected to 'sign something by the end of the week'. He added that foreign steel dumping was an "assault" that put USA companies and factories out of business.

Nations around the globe that were not excluded from the tariffs reacted with dismay.

Brussels wants to maximise the political impact of its reprisals on the USA while minimising the impact of a trade war on European consumers.

"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. That could unleash a protectionist free-for-all, damaging to the global economy - something the WTO was created to prevent.

Canadian Foreign Minister Chrystia Freeland, meanwhile, called the announcement a "step forward" and said Canadian officials had exerted tremendous efforts to get the exemption.

Japan's foreign ministry said the tariffs risk having a large effect on economic and cooperative relations with the USA government.

Trump's position on protectionism has divided his Republican Party and led his top economic adviser, Gary Cohn, to announce his resignation this week.

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