U.S. President Donald Trump’s threat to impose steep tariffs on steel and aluminum imports sparked concerns of a trade war Friday, with emerging markets trading lower and some world leaders threatening to take retaliatory measures.
Japan’s Nikkei share average fell to a more than two-week low Friday. The Nikkei ended 2.5 percent lower at 21,181.64 points, its lowest closing since Feb. 14.
“Automakers will have to bear the cost, and they may also have to raise prices while auto sales are already sluggish,” said Takuya Takahashi, a strategist at Daiwa Securities. “This isn’t looking good to the auto sector.”
China, EU, Canada react
China on Friday expressed “grave concern” about the apparent U.S. trade policy but had no immediate response to Trump’s announcement that he will increase duties on steel and aluminum imports.
European Commission President Jean-Claude Juncker denounced Trump’s trade plan as “a blatant intervention to protect U.S. domestic industry.” He said the EU would take retaliatory measures, it Trump implements his plan.
Canada said it would “take responsive measures” to protect its trade interests and workers if the restrictions are imposed on its steel and aluminum products.
Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.”
The trade war talk had stocks closing sharply lower on Wall Street.
The American International Automobile Dealers Association said Trump’s tariff plans would increase prices substantially.
“This is going to have fallout on our downstream suppliers, particularly in the automotive, machinery and aircraft sectors,” said Wendy Cutler, a former U.S. trade official. “What benefits one industry can hurt another. What saves one job can jeopardize another,” she said.
White House press secretary Sarah Huckabee Sanders said the president’s decision “shouldn’t come as a surprise to anyone.” She said Trump had talked about the trade plans “for decades.”
Republicans speak out
Not all of Trump’s fellow Republican politicians agreed with his trade war talk.
Senator Ben Sasse of Nebraska said, “You’d expect a policy this bad from a leftist administration, not a supposedly Republican one.”
A spokesman for House Speaker Paul Ryan said the House majority leader hoped the president would “consider the unintended consequences of this idea and look at other approaches before moving forward.”
Trump posted on Twitter Thursday about trade policy.
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) March 1, 2018
At the Thursday meeting, President Trump said the NAFTA trade pact and the World Trade Organization have been disasters for the United States. He asserted “the rise of China economically was directly equal to the date of the opening of the World Trade Organization.”
Trump told officials from steel and aluminum companies that the United States “hasn’t been treated fairly by other countries, but I don’t blame the other countries.”
In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports.
President Trump said he has a lot of respect for Chinese President Xi Jinping, and when he was in China, he told President Xi, “I don’t blame you, if you can get away with almost 500 billion dollars a year off of our country, how can I blame you? Somebody agreed to these deals. Those people should be ashamed of themselves for what they let happened.”
Xi’s top economic adviser, Liu He, is set to visit the White House Thursday to meet with top administration officials, including Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Trump’s chief economic adviser Gary Cohn.
A White House official speaking on condition of anonymity told Reuters that they expect a “frank exchange of views” and will focus on “the substantive issues.”
Ryan L. Hass, the David M. Rubenstein Fellow at John L. Thornton China Center and the Center for East Asia Policy Studies at Brookings Institution told VOA he believes in the best-case scenario, Liu’s visit will assure both sides that “they are committed to solving underlying problems in the bilateral trade relationship.” Hass noted, “In such a scenario, both sides would agree on the problems that need to be addressed, the framework for addressing them, and the participants and timeline for concluding negotiations.”
Hass said if Liu’s visit fails to exceed the White House’s expectations, then the probability of unilateral U.S. trade actions against China will go up.
“If the U.S. takes unilateral actions, China likely will respond proportionately, and that could set off a tit-for-tat cycle leading to a trade war,” Hass said.