INSUBCONTINENT EXCLUSIVE:
Donald Trump and Canadian PM Justin Trudeau are seen here at the White House in October 2017.
President Donald Trump campaigned on going hard after China for ripping off the United
Yet a year and a half into his presidency, Trump has put more tariffs on longtime U.S
allies than he has on China, his supposed "bad guy" on trade
The Trump administration announced new tariffs Thursday on the European Union, Canada and Mexico.Almost all of the reaction has been
Many are calling it a political and economic mistake.America's allies are stunned, stocks slid on Wall Street as trade-war fears returned,
and economists are warning that Americans will soon face higher prices on a wide variety of products
A slew of Republican lawmakers immediately trashed the move as bad for the economy and foreign relations."Europe, Canada Mexico aren't
You don't treat allies the same way you treat opponents
Blanket protectionism is a big part of why we had a Great Depression
'Make America Great Again' shouldn't mean 'Make America 1929 Again' " tweeted Sen
Ben Sasse, R-Neb., joining an opposition that included many Republican officials and business groups
Trump's latest move takes the focus off China
lawmakers) agree with Trump that China isn't playing fair on trade, but instead of turning the EU and Canada into allies in the trade fight
against China, Trump is alienating them.The president has threatened tariffs on an additional $50 billion in Chinese goods later this month,
but he has often changed his mind, putting tariffs on hold or scaling them back before they go into effect
Right now, Canada and the EU are taking a bigger blow
(The EU and other allies would also bear the brunt of Trump's proposed tariffs on autos).Of course, it could all change quickly with a Trump
tweet or remark."The president has the authority unilaterally
to do anything he wishes at any point subsequent to today
There is potential flexibility going forward," Commerce Secretary Wilbur Ross said Thursday on a call with reporters.--Here's what happened:
Trump is hitting the EU, Canada and Mexico with a 25 percent tariff on steel imports and a 10 percent tariff on aluminum sent to the United
While China is also subject to the tariffs, the EU and Canada send far more metal to the United States, so the penalties will have a much
larger impact on them."We don't buy steel and aluminum from China
We buy it from our allies," said economist Chad Bown, a senior fellow at the Peterson Institute for International Economics.Take a look at
steel and aluminum imports last year from various countries to understand who's affected most (data compiled by PIIE):Canada: $12.4
billionEuropean Union: $7.7 billionMexico: $2.9 billionChina: $2.9 billionJapan: $2 billion--Here's what it means for Americans: Higher
It's uncertain, at this point, how much prices will go up, but any increase in the cost of metals will likely cause prices of beer cans,
cars and many other items to increase, possibly as early as late summer."We don't go out and buy steel beams, but we buy things that have
The things we buy will be more expensive," Bown said.The Trump administration began putting tariffs on steel and aluminum imports in March,
but Trump temporarily exempted a ton of countries (including Canada, Mexico and those in the EU)
In March, the tariffs covered only about a third of metal imports
That hurt, but it was more like a pinprick.Trump's latest move is more like a slap
It's likely to sting more, because about 80 percent of imports are covered by the tariffs now
Prices of metals will almost certainly rise in the United States
The price of hot-rolled coil steel, for example, is already up nearly 40 percent this year.--Why is Trump doing this Trump argues these
tariffs are necessary for "national security," both to have enough metal to build tanks and airplanes and for economic security
He says we need to do this to save the American steel and aluminum industries and their good-paying jobs
He singled out China for dumping cheap steel on the global market for years, driving prices so low that some American factories couldn't
survive.Most agree China is a major cause of the problems, but the issue is: The United States doesn't buy much steel from China
These tariffs aren't doing much to hurt China
allies are taking the punch, even though there's little evidence they are buying Chinese steel and then shipping it here
(trans-shipment).The Trump administration argues that the only way to curtail China's metal industry is to force American allies to agree to
tariffs or quotas that limit how much steel they send to the United States
Their goal is to reduce demand for Chinese metals all over the world."China's direct exports to us are quite small, but their impact on the
overall market is quite large," Ross said Thursday
"That was the fundamental reason why this [tariff] had to be very wide ranging."Opponents of the tariffs say that the national security
claim is bogus and that Trump would be far better off persuading allies to join him in dealing with China than imposing tariffs on them."To
do tariffs in the name of national security is absurd," said Matthew Rooney, managing director of the Bush Institute, who worked for many
years at the State Department
It opens the door to other trading partners using national security as a justification to break their free-trade agreements."--What impact
will this have on the U.S
economy This move is unlikely to tank the U.S
The tariffs affect billions of dollars of steel and aluminum, but that is relatively small in the context of the $19 trillion American
Ross called the impact "trivial." But the real issue is what comes next.Oxford Economics (among others) noted that these tariffs increase
the chance of a full-blown trade war
Already, Mexico and the EU have fired back at Trump, announcing they will put tariffs (a.k.a
taxes) on some American goods sent to their countries
If Trump responds with more tariffs, the situation could escalate rapidly.The overall impact on the U.S
economy might be small, but some Americans could be hurt a lot
The EU and Mexico plan to target many of their retaliatory tariffs on U.S
farmers, for example.The tariffs could also be a blow to Trump's tax cuts
Middle-class households are saving about $900 this year on taxes, but the tariffs are likely to cause people to pay more for stuff at the
store (or car dealership)
If Americans end up paying $500 more for a car, that eats into the benefit of the tax cut significantly
Similarly, business executives might get nervous about what's going on with trade and start to pull back on investing in new factories and
equipment.The move is also likely to make it harder for Trump to get a new NAFTA deal with Canada and Mexico or trade concessions from the
These countries are angry and don't want to be seen as caving to Trump's tough moves."This represents another signal that prospects for a
near-term NAFTA deal are fading," Alec Phillips, chief U.S
