Trump defiant after criticism of steel and aluminium tariffs

Trump said on Thursday that tariffs of 25 percent on steel imports and 10 percent on aluminium products were designed to safeguard American jobs in the face of cheaper foreign products and would be formally announced next week.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted on Friday.

“Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” he wrote.

The prospect of retaliation from Canada, China and Europe sent world stocks tumbling towards a 2.5 percent weekly loss as investors turned to traditional safe havens such as government bonds, gold and the Japanese yen.

ArcelorMittal SA, the world’s biggest steelmaker, slumped nearly 5 percent and shares in automakers such as Fiat Chrysler suffered on concerns U.S. tariffs could increase the cost of key materials used in cars.

“It is a real worry because Europe is an open global economy so it isn’t just about U.S. versus China,” said Ian Ormiston, European equity fund manager at Old Mutual Global Investors. “And we will see retaliation there are no two ways about it.”

Trump believes the tariffs will protect American jobs but many economists say price increases for consumers of steel and aluminium, such as the auto and oil industries, will destroy more jobs than they create.

Home appliance maker Electrolux said it was delaying a $250 million expansion of its plant in the U.S. state of Tennessee as it was worried U.S. steel prices would rise and make manufacturing there less competitive.

But Turkey’s leading steelmaker Borusan Holding said it might expand its U.S. steel pipe factory in Texas because of the proposed tariffs.

EU SAFEGUARD MEASURES

The European Commission, the EU executive, called the U.S. tariffs a blatant intervention that amounted to protectionism and promised to act “firmly” in response.

The EU, which sees itself as a global counterweight to a protectionist-leaning Trump, made no mention of retaliation but spoke of countermeasures that conform with World Trade Organization (WTO) rules.

“We see international trade relations as a win-win situation,” a European Commission spokesman said.

“We don’t see this as a situation where, like in a zero-sum game, one party loses because another party wins. Trade is beneficial for everyone. It needs to take place on the basis of rules and these rules are in place.”

Safeguard measures, last deployed by Europe in 2002 after then U.S. President George W. Bush imposed steel import duties, would be designed to guard against steel and aluminium being diverted to Europe from elsewhere if U.S. tariffs come in.

But to conform with WTO rules such measures would have to apply to imports from all countries and could also hit producers from China, India, Russia, South Korea to Turkey.

“A trade war between Europe and the United States will only have losers,” said French Finance Minister Bruno Le Maire, adding that all options were on the table and he would discuss the issue with his German and British counterparts on Friday.

‘PRETTY COMMITTED’

Steel has become an important focus for Trump, who said he would restore the U.S. industry and punish what he sees as unfair trade practices, particularly by China.

While U.S. officials said some details of the tariffs still needed to be ironed out, White House spokeswoman Sarah Sanders said on Friday the levels of 25 percent for steel and 10 percent for aluminium were not expected to change.

“This is something he’s wanted to do for a while. Never say never, but I think he’s pretty committed to moving this forward,” Sanders told a press pool.

Republican U.S. senator Ben Sasse, who has been critical of Trump, said there were only losers in trade wars.

“Kooky 18th century protectionism will jack up prices on American families – and will prompt retaliation,” he said in a tweet. “Make no mistake, if the president goes through with this it will kill American jobs.”

The United States is the world’s biggest steel importer, buying 35.6 million tonnes in 2017. Canada is the leading supplier, accounting for 16.7 percent, followed by Brazil on 13.2 percent and South Korea on 9.7 percent.

Officials were unable to say immediately whether the tariffs would include imports from Canada and Mexico, Washington’s partners in the North American Free Trade Agreement (NAFTA) which is being reworked.

“Should restrictions be imposed on Canadian steel and aluminium products, Canada will take responsive measures to defend its trade interests and workers,” Foreign Minister Chrystia Freeland said, calling any trade restrictions “absolutely unacceptable”.

Mining company Rio Tinto, the largest producer of aluminium in Canada, Alcoa Corp and the United Steelworkers union, which represents workers in the United States and Canada, all said Canada should be spared tariffs.

Although China accounts for only 2 percent of U.S. steel imports, its massive industry expansion has helped produce a global steel glut that has driven down prices.

“China urges the United States to show restraint in using protective trade measures, respect multilateral trade rules, and make a positive contribution to international trade order,” said Chinese Foreign Ministry spokeswoman Hua Chunying.

Asian steelmakers also worry that U.S. tariffs could result in their domestic markets being flooded with steel products that have nowhere else to go.

South Korea said it would keep talking to U.S. officials until Washington’s plans are finalised.

(By Susan Heavey and Philip Blenkinsop. Additional reporting by Jane Chung in SEOUL and Tom Westbrook in SYDNEY, Kaori Kaneko in TOKYO, Tom Daly in BEIJING, Minami Funakoshi, Chang-Ran Kim and Yuka Obayashi in TOKYO, Chayut Setboonsarng in BANGKOK and Neha Dasgupta in NEW DELHI, Ceyda Caglayan in ISTANBUL, Robert-Jan Bartunek in BRUSSELS, Sujata Rao-Coverley in London and Polina Devitt in MOSCOW; Writing by David Clarke, Editing by Timothy Heritage)