Exclude tariffs on steel, aluminium

US President Donald Trump talks to China's President Xi Jinping | Thomas Peter  AFP via Getty Images

US President Donald Trump talks to China's President Xi Jinping | Thomas Peter AFP via Getty Images

On Thursday, President Trump signed sweeping new tariffs on steel and aluminum, against the urging of economists, allies and most of the manufacturing, retail and home-building industries.

A more likely scenario is that other countries could respond with strategic tariffs and duties on other USA products, according to Chad Bown, a senior fellow at the Peterson Institute for International Economics.

Under U.S. trade law, Lighthizer isn't due to deliver the results of his probe until August. Section 232 allows emergency trade sanctions on "national security" grounds.

Since then, our two economies have become increasingly more integrated - underpinned by well-established and lucrative supply chains.

China reported its 2017 USA trade surplus as $276 billion, also about two thirds of its reported global surplus of $422.5 billion.

Canada has vowed to retaliate if duties are imposed but Trudeau did not answer directly when asked what measures it might take.

The U.S. has been intensifying trade protectionism since a year ago.

Recent weeks have seen him follow through on those promises, with Trump announcing in early March a 25 per cent tariff on United States steel imports, but with exemptions for Canada and Mexico.

Read the Auto Care Association's full letter submitted to the White House here. The worldwide pushback was perhaps best captured by prime minister Pierre Elliott Trudeau when he told Nixon that it was impossible for Canadian businesses to purchase US goods if they can't sell their own products in the American marketplace. This policy will likely destroy American jobs both in industries that use steel and aluminum and in ones that may soon be hit by retaliatory measures from other countries.

"In some places trade has been to blame for the pains of globalisation or they used it as a scapegoat or they think we can live behind walls and borders", European Trade Commissioner Cecilia Malmstroem said at a trade conference in Brussels. But that would only hurt Canadian manufacturers.

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The European Union told President Donald Trump on Monday that it won't be cowed by his escalating protectionist rhetoric and talk of punitive tariffs.

The three-year tariffs were supposed to give USA steel producers time to regain their footing and stem job losses. Tellingly, numerous major US military contractors - without any reliable source of aluminum being produced domestically - depend heavily upon imported Canadian aluminum to drive their operations. "What they do need is more infrastructure spending". "A lot of steel mills are now opening up because what I did", Trump crowed, without offering evidence.

The tariffs were abandoned early, credited with creating 10,000 jobs in steel-related industries, but blamed for the loss of 200,000 other jobs and $4 billion in wages because of higher steel prices.

USA automakers are among the businesses with the most at stake, accounting for 38 percent of the aluminum and 15 percent of the steel consumed in the country, according to Ward's Automotive Reports.

But in Wisconsin, Minnesota, Michigan and other states where voters hoped Trump would employ business acumen to boost the economy and create more jobs, there were fears that the proposed tariffs could have the opposite effect. He might not understand the basic economic implications of his most recent moves, but Trump surely gets the politics of angering his base.

On March 10, Europe's Commissioner of Trade Cecilia Malmström and Japanese Economy and Trade Minister Hiroshige Seko metUS Trade Representative Robert Lighthizer, where the two outlined their arguments with Lighthizer, saying that both the European Union and Japan are strategic trade and security partners of the United States and are therefore exempt from the new tariffs according to US law that grants exceptions for allies and those that do not pose a national security threat.

Naysayers argue tariffs will raise prices, spark a trade war, and do nothing to bolster America's military preparedness - the official rationale for the move. But neither am I suggesting that we cave into Trump's plainly bullyish tactics and threats of retaliation.

If this is how we show China who's boss, China has just learned it has a pretty dumb boss.

Peter McKenna is professor and chair of political science at the University of Prince Edward Island in Charlottetown.

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