WASHINGTON – Europe, Australia and South Korea are among a significant list of trading partners to be initially exempt from new US tariffs on foreign steel and aluminium, the top US trade official said on the eve of Friday’s imposition of the import taxes.
Separately, US President Donald Trump announced at least 50 billion dollars in tariffs targeting China over what the White House says are long-standing unfair trade practices.
The rumblings of protectionism and trade war were followed by a steep sell-off on Wall Street, where the blue-chip Dow Jones Industrial Average lost more than 2.9 per cent, while the broader Standard & Poor’s 500 Index was off some 2.5 per cent.
Trump had announced on March 8 that global tariffs of 25 per cent on foreign steel and 10 per cent on aluminium products would be imposed within 15 days, invoking a rarely used US law authorizing presidential action against imports that undermine national security.
He said neighbours Canada and Mexico would be excluded amid ongoing talks to revise the 1994 North American Free Trade Agreement (NAFTA).
Testifying on Thursday to the Senate Finance Committee, US Trade Representative Robert Lighthizer said that Trump had decided to “pause the imposition of the tariffs” while negotiating with a “list” of additional countries.
“We have Europe, we have Australia, we have Argentina, we have Brazil, who am I forgetting? And obviously Korea, where we’re negotiating, of course,” Lighthizer said.
At the White House, Trump said that “many countries are calling to negotiate better trade deals, because they don’t want to have to pay the steel and aluminium tariffs.”
EU Trade Commissioner Cecilia Malmstrom said that the economic bloc is “always willing to engage with [its] American partners, but we do not negotiate anything under pressure or threat.”
The German government welcomed the news. “We acknowledge with relief the US government’s announcement not to impose any tariffs on the European Union in the first instance,” said German Finance Minister and Vice Chancellor Olaf Scholz on Thursday.
“Becuase protectionism is the wrong path. Free trade is fundamental to our prosperity,” Scholz said.
The tariffs on Chinese goods follow a seven-month formal investigation ordered by Trump last year into practices including forcing US companies to accept minority partnerships to do business inside China.
The action to be taken against a wide range of imports from China are “designed to offset the gains that the Chinese have received through their unfair trade practices,” said Everett Eissenstat, deputy director of Trump’s National Economic Council.
The foreign ownership restrictions force US companies to transfer technologies that eventually aid Chinese competitors, said Peter Navarro, Trump’s chief trade adviser.
With the Chinese tariffs, which are to be finalized within 60 days, the United States was “strategically defending itself” against China’s “economic aggression,” Navarro told reporters.
He said the action was a “seismic shift” in trade strategy toward China, after talks with Beijing over trade issues that began under the previous Bush and Obama administrations and continued last year with the “Mar-a-Lago process” at Trump’s Florida resort, where he met Chinese President Xi Jinping.
“That process has failed,” Navarro said. “Finally, the president decided that we need to move forward.”
At Trump’s signing of a memorandum ordering the process to add taxes on Chinese imports, Vice President Mike Pence said that “the era of economic surrender is over.”
He called the tariffs a “targeted and focused action to protect not only American jobs but America’s technology.”
Earlier, Beijing vowed ahead of Trump’s expected announcement to take “all measures” to defend its interests.
“China firmly opposes the US’ unilateral and protectionist measures,” Chinese Foreign Ministry spokeswoman Hua Chunying said on Thursday.
The world’s second-largest economy will not “sit back and ignore” its rights and interests being harmed, she said, warning against “actions that will harm us both.”
Hua pointed out that China imports 62 per cent of US soybeans and 25 per cent of Boeing aircraft, two sectors of the US economy that might be hit by potential retaliatory measures by Beijing.
Trump has long lamented the 375-billion-dollar US trade deficit with China.
According to the World Trade Organization, China’s average tariffs in 2017 stood at 10 per cent, while US tariffs were 3.4 per cent and the European Union’s 5 percent. -DPA