By Jason Lange and Philip Blenkinsop WASHINGTON/BRUSSELS, June 1 : Canada, Mexico and the European Union retaliated against U.S. tariffs on steel and aluminium with levies on billions of dollars of U.S. goods from orange juice and whiskey to blue jeans and Harley-Davidson motorcycles.
The EU took the United States to the World Trade Organization to challenge the legality of the new tariffs and the Trump administration’s national-security justification. Brussels lodged an eight-page list at the international trade body of goods it would hit with retaliatory measures.
They run the gamut from big motorcycles like the Harleys, built on the home turf of House Speaker Paul Ryan, to “canoes”, “manicure or pedicure preparations” and even “sinks and washbasins, of stainless steel” — the proverbial kitchen sink .
“We are determined to protect the multilateral system,” European Union Trade Commissioner Cecilia Malmstrom said. “We are expecting everybody to play by the rules.” President Donald Trump’s tariffs on Washington’s closest allies drew condemnation at home from Republican lawmakers and the country’s main business lobbying group and sent a chill through financial markets.
The Dow Jones Industrial Average lost 1 percent and the S&P 500 shed 0.69 percent on Thursday. Shares of industrial heavyweights Boeing and Caterpillar both fell. Trade war fears drove Chinese shares lower on Friday, with the Shanghai Composite Index ending down 0.7 percent.
European shares were bolstered by a long-awaited deal to form a government in Italy, but still down for the week.
Tariffs of 25 percent on steel imports and 10 percent on aluminium were imposed on the EU, Canada and Mexico from midnight in Washington, 0400 GMT on Friday.
“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” U.S. Commerce Secretary Wilbur Ross said.
But the EU’s Malmstrom said there would be no such wider trade talks as long as the U.S. measures were in place.
“We were not at the negotiating table. Our offer was: ‘You take this gun away from us, we sit together as friends and equals and we discuss,’ and this would eventually lead to negotiations,” Malmstrom told a news conference in Brussels. “We never got this. So now this door for the moment is closed.” Canada and Mexico, embroiled in talks with the United States to modernise the North American Free Trade Agreement (NAFTA), responded swiftly. Canada, the largest supplier of steel to the United States, will impose tariffs covering C$16.6 billion ($12.8 billion) on U.S. imports, including whiskey, orange juice, steel, aluminium and other products.
A DECISION WE DEPLORE
“The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must,” Prime Minister Justin Trudeau said.
Mexico announced what it described as “equivalent” measures on a wide range of U.S. farm and industrial products, including pork legs, apples, grapes, cheese, steel and other goods.
The S&P 500’s packaged foods and meats industry sub-index fell 2 percent, with shares of meat producer Tyson Foods Inc falling 3.9 percent.
For the EU, a decision on just how far to push back will require agreement among the 28 member states that make up the world’s biggest trade bloc. Germany, by far the biggest exporter to the United States, is keen to avoid a wider trade war, especially as the Trump administration has floated the prospect of tariffs on cars. Other countries such as France favour more forceful retaliation against what they see as American bullying.
EU members have so far given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of U.S. exports. EU exports subject to U.S. duties are worth 6.4 billion euros ($7.5 billion).
While the U.S. administration’s decision to hit its European and North American allies with the metals tariffs was not aimed directly at China, it also sets the background for negotiations with Beijing, where Ross was headed on Friday for talks.
The Trump administration wants China to buy more American goods to lower a trade deficit. Opponents of the tariffs on European and North American metals say it is hurting allies when it needs them most to help put pressure on Beijing.
“All countries, especially the major economies, should resolutely oppose all forms of trade and investment protectionism,” China’s foreign ministry spokeswoman Hua Chunying told a media briefing, when asked about the U.S. move.
Malmstrom said China’s over-production was to blame for the glut of steel that prompted the U.S. action against its allies. She also announced a case against China at the WTO over the alleged infringement of intellectual property rights, saying the action simultaneous with its case against the United States showed that the EU was being evenhanded.
French President Emmanuel Macron telephoned Trump to tell him he believed the tariffs were both a mistake and illegal, his office said.
U.S. Chamber of Commerce President Tom Donohue warned in a letter to the body’s board that current trade policies could threaten economic progress and cause the loss of more than 2 million jobs, mostly in states that voted for Trump.