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Trade Wars

A trade war is brewing on either side of the Atlantic with Donald Trump’s overdose of protectionism by imposing tariffs…

Trade Wars

US President Donald Trump (Photo: IANS/File)

A trade war is brewing on either side of the Atlantic with Donald Trump’s overdose of protectionism by imposing tariffs on aluminium and steel imports.

The announcement has been greeted with a fair measure of consternation, notably in China and Britain where Theresa May has promptly debunked the economic measure as a “needless provocation of allies and enemies alike”.

It could even be asked if the targeting of China could spoil attempts to reduce tension with nuclear-armed North Korea. The link between geopolitics and international trade becomes obvious with Peter Navarro, director of the White House National Trade Council, confirming on Sunday that China was the focus of Trump’s “surprise decision”, announced at the White House late last week.

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“China is at the root of the problem,” he said. “China has tremendous overcapacity in both aluminium and steel. They flood the world market and this whittles down to our shores.” Aside from the souring of relations between the US and China, there is little doubt that the decision has caused a rift in the White House lute. The Chief Economic Adviser, Gary Cohn, has reportedly binned the tariffs as “obviously stupid”, and is said to be close to resigning.

Trump’s proposals have received measured support from the Pentagon which, while supporting the move, prefers a targeted rather than a unilateral system. Defence Secretary James Mattis has voiced concern over the impact on allies.

The decision has also been condemned by the World Trade Organisation (WTO) and America’s allies including Canada and South Korea, which between them account for a quarter of US steel imports whereas China accounts for just 2 per cent.

Beijing has made its position clear by asserting that China would defend its interests. The country’s vice-foreign minister, Zhang Yesui, favours negotiations and mutual opening of markets as the best ways to resolve trade conflicts.

In a word, the hike in tariffs, which supposedly mirrors Trump’s “America First” policy, has almost immediately effected a severe jolt to trans-national economies.

In retaliation, the European Union has emitted its trade signal, specifically to impose tariffs on “stereotypical American products”, notably Harley Davidson motorbikes, Levi’s jeans, and Bourbon whisky.

That intent can be contextualised with the European Commission president, Jean-Claude Junker’s robust assertion against putting “our head in the sand”.

The compulsion, quite obviously, is “to re-balance the global trade playing field” after President Trump’s move. Close to a year after the Brexit referendum, Mrs May and the EU headquarters in Brussels are on the same page.

Within 24 hours, there has emerged a latter-day Concert of Europe against America. There are few voices in the world today in favour of Trump’s praxis of protectionism.

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