A trade war has erupted across the Atlantic. Europe and Canada, and also of course the United States of America, are on the cusp of a grave crisis in international trade and are indeed on the brink of a full-scale war over tariffs. Donald Trump’s decision last Thursday to impose tariffs on steel and aluminium products has been greeted by leaders in Europe and Canada as a measure in international trade that is “totally unacceptable”. The plot thickens in a vast swathe of the world with the announcement of the president of the European Commission, Jean-Claude Juncker.
He has promised immediate retaliation after the US Commerce Secretary, Wilbur Ross, said EU companies would face a 25 per cent duty on steel and a 10 per cent duty on aluminium from midnight on Thursday. Europe, along with Canada and Mexico, had been granted a temporary reprieve from the tariffs after they were unveiled by President Trump two months ago. He has now ensured that he may yet be in the limelight even in the midst of the uncertainty that shrouds the scheduled summit with the President of North Korea.
Sensationalism has been the hallmark of the man’s foreign policy. The US announcement has had an immediate impact on the markets ~ Wall Street slumped as the Dow Jones Industrial Average closed down more than 250 points as investors sold off shares in manufacturers and corporations with global reach. Shares also declined across Europe. The jitters were palpable in global financial markets when Ross said insufficient progress had been made in talks with three of America’s traditional allies to reduce the country’s trade deficit and that the waiver was being lifted. Washington’s move, which coincides with Trump’s threat to initiate protectionist action against China, sparked an immediate and angry response from Canada, Brussels and from individual European capitals. Juncker called the US move “unjustified” and said the EU had no choice but to hit back with tariffs on US goods and by filing a case at the World Trade Organisation in Geneva.
Trump would appear to have taken a calculated risk ~ the isolation of the US in matters economic. Hence perhaps the frantic effort to revive the summit plan with North Korea which will be held on 12 June, after all the prevarication. It was more than just a coincidence that the US Secretary of State, Mike Pompeo, met the North Korean official, Kim Yong Choi, in New York on the day of the US economic reprisal against Europe, Canada and Mexico, and the counter-mobilisation, though the issues at stake are seemingly unrelated. A tit-for-tat reprisal is bound to have an impact generally, and to the detriment of international economics. A formula will hopefully be worked out at next week’s meeting of the G7 industrial nations in Canada.