Trump exempts close U.S. allies from tariffs

By Staff, with files from The Associated Press | March 23, 2018 | Last updated on March 23, 2018
3 min read

The European Union, Australia, Argentina, Brazil, South Korea, Canada and Mexico will get initial exemptions from looming steel and aluminum tariffs from the Trump administration. President Donald Trump authorized the exemptions late Thursday night.

Trump is planning to impose tariffs of 25% on imported steel and 10% on aluminum—trade penalties aimed at China for flooding the world with cheap steel and aluminum.

The White House says the exemptions will last until May 1, 2018, pending ongoing discussions.

The White House says any country not currently benefiting from the exemption is welcome to discuss being added to the list “based on a shared commitment to addressing global excess steel and aluminum capacity and production.”

That news came after lawmakers were calling on the Trump administration to provide more clarity on which countries would be exempted from looming tariffs on steel and aluminum.

What about China?

Trump moved on a separate trade front earlier Thursday, paving the way for tariffs on China as punishment for what he said is the theft of American technology. He told reporters that the threat of the steel and aluminum tariffs was already having an impact.

“Many countries are calling to negotiate better trade deals because they don’t want to have to pay the steel and aluminum tariffs,” Trump said.

The restrictions on Chinese investment and tariffs apply to nearly $50 billion-worth of Chinese imports to punish Beijing for stealing American technology and pressuring U.S. companies to hand it over.

China had already been warning that it would take all necessary measures’ to defend itself, raising the prospect of a trade war between the world’s two biggest economies.

The White House then said President Trump would direct the Office of the U.S. Trade Representative to publish a list of proposed tariffs for public comment within 15 days. USTR had already identified potential targets: 1,300 product lines worth about $48 billion. The president was also asking Treasury Secretary Steven Mnuchin to come up with a list of restrictions on Chinese investment.

The move will make the U.S. a “much stronger, much richer nation.,” Trump said.

“Trump’s trade tantrums are putting him on the wrong side of history,” says Nigel Green, founder and CEO of deVere Group, in a Friday release. “By imposing tariffs and opposing free trade and globalization, he is potentially creating a totally unnecessary trade war that will be detrimental to the U.S. and global economies. It is almost like he is trying to drag America back.”

Since the U.S. leader’s “tariff plans have created uncertainty and put global stock markets under pressure,” he adds, “investors [should] review their portfolios to ensure that they are properly diversified across regions, sectors and assets classes.”

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China’s response

China announced a $3-billion list of U.S. goods for possible retaliation. It also girded Friday for a bigger battle over technology policy as financial markets sank on fears of global disruption.

The Commerce Ministry said higher duties on pork, apples, steel pipe and other goods would offset Chinese losses due to Trump’s tariff hike on steel and aluminum imports. It urged Washington to negotiate a settlement but set no deadline.

In a separate and potentially bigger dispute, the ministry criticized Trump’s decision Thursday to approve a possible tariff hike on Chinese imports over Beijing’s technology policy. It gave no indication of a possible response but a foreign ministry spokeswoman said Beijing was “fully prepared to defend” its interests.

“We don’t want a trade war, but we are not afraid of it,” said the spokeswoman, Hua Chunying.

Read: China’s premier wants to avoid a ‘trade war’

Yet, financial markets sank on concern the escalating tensions might disrupt the biggest global trading relationship or lead other nations to raise import barriers.

Tokyo’s benchmark tumbled by an unusually large 5.1%, while the Shanghai Composite Index closed down 3.4%. The dollar dipped to 104.90 yen as investors shifted into the Japanese currency, which is viewed as a “safe haven” from risk.

The list announced Friday was linked to Trump’s steel and aluminum tariffs, but companies already were looking ahead to a battle over complaints Beijing steals or forces companies to hand over technology.

The U.S. steel and aluminum tariffs also have irked Japan, America’s closest ally in Asia.

Beijing has reported a trade surplus of $275.8 billion with the United States last year, or two-thirds of its global total. Washington reports different figures that put the gap at a record $375.2 billion.

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Staff, with files from The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City.