U.S. President Donald Trump pushed through with his threat to impose higher tariffs on steel and aluminium coming from the European Union, Canada, and Mexico. The move triggered protests from the countries, American businesses, and initiated a possible trade war with the U.S. allies.
The EU did not waste time and immediately announced higher taxes on U.S. products such as bourbon. Canada countered by imposing higher tariffs on steel and aluminium from the United States while Mexico planned to target U.S. agricultural products.
Canadian Prime Minister Justin Trudeau revealed that shortly before the announcement of the higher tariffs, he rejected a proposal from U.S. Vice- President Mike Pence to have all trading agreements be renewed every five years. Trudeau described the proposal as an “ultimatum”.
Analysts are concerned that Trump’s foreign trade policy may risk the country’s trade agreements with countries that account for $2.5 trillion of the United States’ annual merchandise trade. Rufus Yerxa, who heads the National Foreign Trade Council has been befuddled by Trump’s “America First” policy:
“Today is a day when the Trump administration pretty much signalled it is throwing out the rule book on trade. I’ve been dealing with this stuff for four decades, and I’ve never seen anything like this.”
President Trump has long believed that the United States has been on the losing end of these trade agreements:
“The United States has been taken advantage of for many decades on trade. Those days are over. Earlier today, this message was conveyed to Prime Minister Justin Trudeau of Canada: The United States will agree to a fair deal, or there will be no deal at all.”
The EU responded that it will likewise impose high import duties on a “number of imports from the United States”. The list which covers 10- pages of U.S. products includes bourbon and Harley Davidson motorcycles.
Jean- Claude Juncker, President of the European Commission also said the EU will file a complaint with the World Trade Organization (WTO):
“This is protectionism, pure and simple.”
Mexico said it would slap high import taxes on U.S. goods such as pork bellies, apples, cranberries, grapes, cheese, and steel.
Canada immediately imposed $12.8 Billion surtax on steel, aluminium, coffee, candy, pizza, and quiche.