Trump vows to strike back at european leaders who warned of retaliation for his tariffs – the washington post electricity in the body causes


Canada is the largest exporter of steel and aluminum to the United States, supplying $7.2 billion of aluminum and $4.3 billion of steel to the United States last year. Yet in goods and services, the United States runs a trade surplus with Canada, which buys $48 billion worth of U.S. automobiles and $40 billion of machinery, in addition to agricultural products.

“The president is going to quickly find out that you can’t start a trade war with your allies and expect them to work with you on other issues,” said Jamie Fly, senior fellow at the German Marshall Fund. “The administration is squandering the little credibility they had with transatlantic partners at a time when they’re asking them to help fix the Iran deal, fight terrorism and increase defense spending. It will not work.”

And while Trump has promoted his new tariffs as part of an “America First” plan, any benefit in terms of jobs could be far outweighed by increased steel costs for U.S. automobiles, wind turbines, shale oil and gas drilling rigs and more — in many cases doing unintended harm to some of his own strongest domestic constituencies.

Trump’s tariffs “are inconsistent with the Administration’s goal of continuing the energy renaissance and building world class infrastructure,” American Petroleum Institute President Jack Gerard said in a statement. “The U.S. oil and natural gas industry, in particular, relies on specialty steel for many of its projects that most U.S. steelmakers don’t supply.”

But large German automakers also have a sizable presence in the United States, with BMW employing thousands of workers in South Carolina and Volkswagen employing thousands more in Tennessee. Those manufacturers produce hundreds of thousands of cars in the United States each year, many of which are later exported to buyers in Asia and Europe.

“The EU will be forced to respond to US protectionism, but does not want tradewar!” wrote a Dutch member of the European Parliament, Marietje Schaake, on Twitter. “By the way, German carmakers alone made [845,000] cars in the US in 2016, the bulk (around 2/3) for export. The world is interconnected, not ­zero-sum.”

Canada’s leaders have said they would retaliate with tariffs on U.S. exports. On Friday, Canadian Prime Minister Justin Trudeau called Trump’s move “absolutely unacceptable,” using the same phrase as Foreign Minister Chrystia Freeland, who also threatened retaliatory measures if Canada isn’t exempted from the trade actions.

Likewise, European Commission President Jean-Claude Juncker said his bloc planned to hit back at the United States by imposing tariffs targeting U.S. products such as bourbon from Kentucky — Senate Majority Leader Mitch McConnell’s home state — and Harley-Davidson motorcycles, which are partly manufactured in House Speaker Paul D. Ryan’s home state, Wisconsin.

Trump has been cheered on by some union leaders and a few close advisers within the White House. They believe U.S. policy has been too complacent for decades and allowed foreign countries to steal away U.S. jobs through unfair government subsidies and unbalanced tariff rules. Even if Trump’s approach shatters the status quo, they believe it is necessary.

“This whole idea that there’s a big downstream effect — it’s just part of the fake news that’s going to be put out to oppose these tariffs,” White House trade adviser Peter Navarro told Fox Business on Friday. “A penny for a six pack of beer — that’s worth it to put Americans back to work in two industries that we need.”

Trump has been particularly critical of situations in which the United States buys more goods and services from other countries than it sells to them. To that end, U.S. firms sold $53 billion in exports and imported $118 billion in goods from Germany last year, the kind of dynamic that he has often complained about.

Still, the tariffs on steel and aluminum Trump unveiled last week are not crafted in a way that would target China, which last year sold $375 billion more goods and services in the United States than what it had ordered, according to the Commerce Department.

“What an extremely stupid move,” Li Xinchuang, vice secretary general of the China Iron and Steel Association, said Friday. “A desperate attempt by Trump to pander to his voters, which I think in fact runs counter to his ‘America First’ pledge.”

In contrast, Jean Simard, president of the Aluminum Association of Canada, said that his industry has been integrated into the U.S. economy for more than 50 years and that the Pentagon considers Canadian aluminum production a strategic military supply.

Through access to cheap capital and electricity, and a soaring domestic construction boom, China’s aluminum and steelmakers have grown sharply. China’s steelmakers have gone from producing 15 percent of the world’s crude steel in 2000 to producing 50 percent in 2016, according to the World Steel Association. China produces eight times as much as the second biggest producer, Japan. (The United States ranks fourth.)

Critics of Trump’s approach have often complained that tariffs and trade wars only drive up costs for domestic consumers, a move that would make German cars more expensive for U.S. consumers. Trump has also said these sorts of threats could incentivize foreign companies to expand their U.S. operations so they don’t have to pay the import fees.

One of Trump’s top advisers, Navarro, also holds the view that German automakers have stolen market share in the United States by importing cars but limiting the number of U.S. cars sold into their country, two people involved in White House deliberations said. Navarro’s stature within the White House has grown in recent weeks as Trump has turned toward advisers with protectionist views as he became frustrated that his trade agenda was floundering.

German officials have spent much of the past year trying to convince U.S. policymakers that they have a healthy trade relationship with the United States that benefits both countries. But Trump has a frosty relationship with German Chancellor Angela Merkel, and these personal relationships can spill into policy decisions at the White House.

“On trade policy, President Trump appears to be listening to advisers with views far outside mainstream economics,” said N. Gregory Mankiw, a Harvard economics professor who was chairman of President George W. Bush’s Council of Economic Advisers. “I don’t know any respected economist, conservative or liberal, who thinks this is the right approach to promoting prosperity.”