The US trade war has started. At least that is what previous American allies are calling Trump’s new tariffs on steel and aluminum. According to Liam Fox, the UK International Trade Secretary, the new tariffs are illegal. Has Donald Trump once again bitten off more than he can chew to secure votes from the US Republican heartlands? The US-UK special relationship seems well and truly divorced!
US Tariffs Illegal According to EU and UK
That’s the way it looks to the UK and the EU, and no doubt Canada and Mexico believe the same. President Donald Trump has justified the tariffs as being essential to protect US national security. The issue will be raised by UK Prime Minister Theresa May at next week’s G7 leaders’ meeting. The 25% tariff on EU steel, and 10% on aluminum are regarded as unjustified by all EU leaders, and the UK is seeking exemptions from this tax.
US National Security?
It appears that only the US believes this to be a matter of national security. It seems to others to be protectionism at its worst! The UK exports some complex steel products to the US that are part of its national security programs, and so the reason given must, by definition, be false. That is because the US government will now have to pay 25% more for them. And should the UK decide to cease providing such products then that is when US national security would be at risk.
A major issue is over-capacity of cheap steel in the industry but most of that is from China, not the EU or the UK or even Canada. Dr. Fox described these new tariffs as ‘absurd’. Not only that, but they are illegal. The French President, Emmanuel Macron, also informed Trump that his tariffs were illegal.
A US Trade War Will Have No Winners
The problem with a US trade war against the EU and UK is that there are no winners, particularly with a US starting a trade war against its allies! The US cannot win such a war, and neither can Canada, the EU, Mexico or the UK. It appears to be a pointless step for a world leader to take, and will achieve little other than antagonize the Western world against the US. Tit-for-tat tariffs applied by the EU will hurt American manufacturing, and harm its improving jobs situation. Many of these jobs will now be under threat.
Over 100 US Goods Listed for Tit-For-Tat Tariffs
Already, the EU has drawn up a list of 100 goods for retaliation. This represents $3.5 billion of exports from the US. Among these goods are bourbon, orange juice, jeans, cosmetics and Harley Davidson products. Prices will rise, and consumers will switch to EU, UK and Asian products.
There will be no winners in this US trade war! It may cost jobs in Canada, the EU and the UK, but it will also cost jobs in the US. Already prices are rising in the US due to Trump’s announcement. Prices will increase in the EU, the UK and in the US all because of a personal opinion. Europeans will move away from purchasing American goods during this US trade war, and once gone they are not easily won back! Special relationship bye-bye!
