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The trade war is on — and Trump voters are the target

The EU will “do what we have to do to rebalance and safeguard" the bloc.

by David Gilbert
Jun 22 2018, 12:10pm

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The European Union’s robust retaliatory tariffs came into force Friday on $3.2 billion of U.S. goods designed specifically to inflict pain on Donald Trump’s political base in the American heartland.

Harley Davidson motorbikes, orange juice and bourbon whiskey, as well as cranberries, peanut butter and playing cards are now subject to a tax by the world’s largest trading bloc — a reaction to the levies imposed earlier this month by Trump on steel and aluminum imports from Europe.

Speaking about the tariffs Thursday, European Commission president Jean Claude Juncker told the Irish parliament that the bloc will “do what we have to do to rebalance and safeguard" itself.

Trump introduced tariffs of 25 percent on steel and 10 percent on aluminum on imports from multiple U.S. trading partners on June 1, arguing that cheap steel and aluminum had flooded the market, threatening American producers vital to the U.S. economy.

While some countries, including South Korea, Argentina, Australia and Brazil, have agreed to limit the steel and aluminum they export to the U.S. to avoid the tariffs, others, such as China, India and Canada, have hit back with their own measures.

And U.S. producers are beginning to worry about the impact if the escalating trade war continues.

“If Europe dried up, then we’re sitting on inventory we didn’t need,” Scott Harris, general manager of the Catoctin Creek Distillery in Virginia, told AP. “And that’s a really tough position to be in.”

READ: Here's a full list of all the U.S. good hit by Friday's EU import tariffs.

The problem for many U.S. producers and manufacturers is that the EU is just one of many countries that have introduced — or are planning to introduce — retaliatory tariffs on U.S. goods.

India

India last week informed the World Trade Organization it would impose tariffs on more than two dozen U.S. products, including almonds, apples and some metals.

The measures aim to collect $241 million in additional taxes from U.S. producers — the same amount Indian steel and aluminum manufacturers are expected to be charged by Trump’s new policy.

U.S. almond farmers will be worst hit, with India buying more than half of all American almond shipments in 2017. Delhi said it will slap an extra 20 percent tariff on U.S. almond imports, which will come into effect from August 4.

Mexico

Mexico is targeting a range of U.S. products with tariffs on pork, steel, cheese, bourbon and apples.

Similar to the European Union, Mexico’s levies are designed to hit producers in Republican strongholds to hurt Trump’s voter base. These include steel from Vice President Mike Pence’s home state of Indiana, motorboats from Senator Marco Rubio’s Florida, and agricultural products from the California district of Representative Kevin McCarthy, the House majority leader.

Mexico’s government has also said it would import more goods from other parts of the world, meaning U.S. companies are likely to see weakened demand for their products from south of the border.

Turkey

Turkey announced Thursday it would impose retaliatory tariffs worth $266.5 million on U.S. goods, including cars, coal, whiskey, cosmetics, machinery equipment and petrochemical products. The Turkish government called Trump’s steel and aluminum tariffs “ill-advised” and “unsupportable.”

“We cannot and will not allow Turkey to be wrongly blamed for America’s economic challenges,” Turkish Economy Minister Nihat Zeybekci said in a statement. “We are part of the solution, not the problem.”

Canada

Canada announced last month it will impose dollar-for-dollar countermeasures worth $12.5 billion on U.S. goods. On the long list of products impacted are flat-rolled steel, playing cards and felt-tipped pens.

The trade war between the neighbors comes during slow-moving talks to agree on an updated North American Free Trade Agreement, and weeks after Trump called Canadian Prime Minister Justin Trudeau “very weak” and “dishonest.”

READ: Trump’s approach to trade is fueling anti-Americanism in Canada

As well as imposing extra taxes on steel and aluminum, Trump has threatened to penalize the Canadian auto industry, but Trudeau doesn’t believe the White House will follow through on his threat given the knock-on effect to the U.S. auto industry.

“I have a hard time accepting that any leader might do the kind of damage to his own auto industry that would happen if he were to bring in such a tariff on Canadian auto manufacturers,” Trudeau said Wednesday.

China

Possibly the greatest threat to U.S. manufacturers and producers is the simmering trade tensions between Washington and Beijing.

Chinese state media hit out at Trump’s protectionist policies Friday, calling them self-defeating and a “symptom of paranoid delusions.” China's commerce ministry warned that U.S. workers and farmers would be the ultimate losers if Trump continued to brandish “big sticks.”

READ: Kim Jong Un rolled into Beijing with some brand-new swagger

Trump has threatened to impose additional 10 percent tariffs on $200 billion worth of Chinese goods if Beijing retaliated to a his previous targeting of $50 billion in Chinese imports to the U.S.

But China is not backing off:

“If the United States loses its rationality and unveils another list of Chinese products for additional tariffs, China will have no choice but to take comprehensive measures combining quantitative and qualitative ones to resolutely strike back," the commerce ministry said in a statement earlier this week.

Japan

While it has yet to formally introduce tariffs, Tokyo has indicated that it will join other countries in hitting back at U.S. protectionism.

Commerce Secretary Wilbur Ross announced this week that the U.S. would grant tariff exceptions on steel products to firms in Japan, but that is unlikely to be placate Japanese officials.

It was reported last month that Japan would impose tariffs on $409 million worth of U.S. products. Given that Japan is the fourth largest export market for U.S. goods, a trade war with Tokyo could be a major problem for many U.S. companies.

Cover image: Donald Trump acknowledges his supporters as he speaks during a rally in Elkhart, Indiana, U.S., on Thursday, May 10, 2018. (Joshua Lott/Bloomberg via Getty Images)