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Trump gearing up for re-election, not trade war with China

12 March 2018

Trump said the tariffs, which will come into effect 15 days after he formally unveiled them Thursday, will not initially apply to Canada and Mexico. "And where one person is basically deciding, you know, tariffs go up or down depending on what kind of behavior ..."

"China does not wish to fight a trade war, nor will China initiate a trade war, but we can handle any challenge and will resolutely defend the interests of our country and our people", he said. "It's clear. We need clarity", European Commission Vice President Jyrki Katainen said on Friday.

Malmstroem said the real problem is an oversupply of steel on global markets, and she rejected Trump's assertion that the tariffs are needed to protect USA national security, especially when most European Union countries are members of North Atlantic Treaty Organisation.

The EU is also maintaining a threat of counter-measures that would target USA imports ranging from maize to motorcycles, and may publish its list next week to allow industry and other interested parties to give their input.

But after two-way talks with Lighthizer, European Trade Commissioner Cecilia Malmstroem tweeted: "No immediate clarity on the exact U.S. procedure for exemption however, so discussions will continue next week".

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South Korea's trade ministry said last week it will take a dispute to the World Trade Organization against the United States for imposing high anti-dumping duties on South Korean steel and transformers.

Key U.S. trading partners and businesses have warned the tariffs could backfire, provoking a trade war and hurting allies like the European Union and Japan more than China, their main target.

China, while it may keep its powder dry, has mentioned possible action over USA agriculture (e.g. soya beans) but it may take advantage of the retreat from global leadership by Trump to fill the vacuum.

"All of a sudden you've forced them to deal politically with their own backlash at home", said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

The tariffs come into force in two weeks, and if the 28-nation European Union can not secure an exemption, it has threatened retaliatory tariffs on USA products like peanut butter and orange juice.

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Allies have little reason not to push back hard - both to protect their own industries and political base and also because Trump has done little to bolster strong relationships with them.

"I'm not going to get into specifics", he said.

"A lot of steel mills are now opening up because of what I did", he said. "For many, many years they've been outsmarting us". The tariffs will also cost 14,400 jobs here. It won't help them in the long run, but it might help Trump politically when he seeks re-election in 2020. "Industries that are net consumers of steel and aluminum in the US now face cost disadvantages relative to their worldwide competitors, especially at a time when the labor market is tight and wage inflation is picking up", he wrote. It agrees with ACC that the tariffs will be harmful to competitiveness.

But the deputy White House spokesman, Raj Shah, said Sunday that no one should have been surprised. I had a frank discussion with the U.S. side about the serious pending issue of steel/aluminium tariffs.

Added Sen. Ron Johnson of Wisconsin: "There's been an terrible lot of advice - this president doesn't seem to be taking it".

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Trump gearing up for re-election, not trade war with China