Published: Sun, June 03, 2018

Economist calls Trump's new tariffs start of a 'psychopath's trade war'

Economist calls Trump's new tariffs start of a 'psychopath's trade war'

Canada is imposing dollar-for-dollar tariff "countermeasures" on up to $16.6 billion worth of USA imports in response to the American decision to make good on its threat of similar tariffs against Canadian-made steel and aluminum.

US Treasury Secretary Steven Mnuchin failed to soothe the frustrations of his Group of Seven counterparts over the 25 percent steel and 10 percent aluminium tariffs that Washington imposed on Mexico, Canada, and the European Union (EU) this week.

Needless to say, the United States now needs to be prepared for a chain of tit-for-tat tariffs on a range of products. The measures were announced earlier in the year, but the United States's neighbors and the European Union - all vital diplomatic partners - had been granted temporary waivers as negotiators sought a compromise that would reduce import levels and allay the White House's grievances over trade deficits.

The tariffs directed at some of the U.S.'s most ardent allies represented the latest move in Trump's "America First" agenda that has roiled financial markets and raised the specter of a trade war involving the U.S., China and some of the globe's most dominant economies.

Trump on Saturday took to Twitter to complain about the higher tariffs charged by some US trading partners under World Trade Organization agreements.

Canada and Mexico, which are embroiled in talks with the United States to update the North American Free Trade Agreement, responded to the US move by announcing levies of their own on a variety of American exports.

But Vice President Mike Pence called back this week to set a NAFTA sunset clause as a precondition for the meeting, which both Canada and Mexico had rejected. "I have argued for the European Union and the U.S. to engage in a positive trans-Atlantic trade agenda, and for the European Union to be fully, permanently and unconditionally exempted from these tariffs".

Neither the tariffs nor a series of retaliatory measures imposed by the federal Liberal government in response will affect the ability to keep renegotiating NAFTA as a separate track, Ross added.

Earlier this week, Mr Trudeau said that killing the deal could be better than swallowing unfavourable revisions to the 1994 trade pact.

Canada has responded by imposing dollar-for-dollar tariff "countermeasures" on up to $16.6 billion worth of USA imports.

Mr Trudeau said: "Canada is a secure supplier of aluminium and steel to the USA defence industry, putting aluminium in American planes and steel in American tanks".

"I don't think in any way the USA is abandoning its leadership in the global economy, quite the contrary".

President Donald Trump is moving ahead with steel and aluminum tariffs on some of the United States' closest allies and that could result in serious pain for agriculture.

Sachs predicted that Trump's actions would have an overall negative effect on the US dollar, and would lead to a rapid increase in the nation's debt.

Countries around the world are already fighting back, announcing retaliatory countermeasures and warning that the US plan will hurt USA consumers. "The US economy will suffer as much as any other economy". But companies in the USA that use imported steel will face higher costs.

Earlier today, this message was conveyed to Prime Minister Justin Trudeau of Canada: "The United State [s] will agree to a fair deal, or there will be no deal at all".

House Speaker Paul Ryan and several leading Republicans in Congress were critical of the administration's tariff action.

The EU's planned measures hit U.S. exports running 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.

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