How to respond to Trump’s tariffs threats

By Yves Faguy March 6, 20186 March 2018

How to respond to Trump’s tariffs threats

 

Yesterday Donald Trump tweeted that his recently threatened steel/aluminum tariffs could be lifted if Canada and Mexico were to agree to a new NAFTA deal – trade apparently being a zero-sum game.

U.S. House  Speaker Paul Ryan also came down hard on Trump’s proposed tariffs, arguing they will lead to a trade war that is nobody’s interest: “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” he said.  It seems Congressional Republicans are mounting an effort to stop Trump from implementing the tariffs

Now there appear to be signals from factions within the White House to weaken the tariffs. “Gary Cohn and other free-trade advocates inside the White House and the Treasury Department are mounting a last-ditch effort to blunt the impact of Trump’s head-turning decision,” Politico reports.

Meanwhile the EU, also angered by the prospect of the Trump tariffs, has proposed retaliatory measures targeting $US 3.5 billion of American goods, including motorcycles, jeans and bourbon whiskey. Trouble is, write Shawn Donnan and Jim Brundsen, the EU’S move could be in contravention of WTO rules:

Both the US invocation of national security and the EU’s rejection of Washington’s argument would be rare manoeuvres in WTO history and be a test of the trade arbiter’s ability to resolve disputes between its largest members.

At the least they would add to the legal mess surrounding what is expected to be a clash of titans in the WTO if Mr Trump presses ahead with the tariffs, as he insisted he would on Monday.

Edward Alden, a senior fellow at the Council on Foreign Relations in Washington, said that by stretching the rules the EU move could undermine the WTO and exacerbate a trade war. “This is just a hair’s breadth away from a no-rules trade war,” he said.

Andrew Coyne offers up this suggestion to the Canadian government: Do nothing, in the short term at least, and rely on those U.S. interests who would be harmed by the tariffs to make the case against them for us.  After all, Trump has been known to change his mind. Failing that, he has another idea:

Rather than raise tariffs on American exports, why not lower them on exports of the same goods from other countries, giving them a leg up over the Americans in our market? The point is made, the punishment is delivered, without shooting off our toes in the process.

Playbook Update: "Republicans are resigned to the fact that they can’t stop Trump from placing these tariffs on steel and aluminum imports. But if he follows through on his threat, senior Republicans will give him time to cool down, and then approach the president with data to show him that he’s wrong, and explain that the tariffs need to be refined. The GOP feels like he’s dug in, at the moment, and not terribly receptive to any outside views. Ryan hinted as much in a closed party meeting Tuesday morning in the Capitol."

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