WASHINGTON — President Donald Trump’s announcement that the United States would impose tariffs on imported steel and aluminum threatened to upend trade relations with allies and perceived adversaries alike and raised concerns over tit-for-tat retaliation that could devolve into a trade war.
Mr. Trump on March 8 announced the imminent imposition of a 25% tariff on imported steel and a 10% tariff on imported aluminum. Considering the complexities involved in crafting international trade and agreements, trading partners voiced consternation that rules that governed the trade status quo could be set aside so easily by the executive of one country.
Under ordinary circumstances, it may not have been legal for the president to take such unilateral trade actions, but Mr. Trump based his action on Section 232 of the Trade Expansion Act of 1962, which allows the president to block imports that he deems threatening to the nation’s security. That determination was controversial with many members of Congress as well as trading partners taking objection.
Cecilia Malmström, the European Union’s chief trade official, said with regard to the national security argument for the tariffs, “We have serious doubt about that justification. We cannot see how the European Union, friends and allies in NATO, can be a threat to national security in the United States.”
She added that the implementation of tariffs by the U.S. would be met with a “firm and proportionate response.”
Jean-Claude Juncker, president of the European Commission, identified potential targets for retaliation including bourbon from Kentucky, home state of Senate Majority Leader Mitch McConnell, and Harley-Davidson motorcycles, headquartered in Wisconsin, home to Speaker of the House Paul Ryan. Some agricultural exports on the E.U. retaliation list included peanut butter, cranberries and orange juice.
“We have tremendous concern about the global ramifications of any new tariffs on ag exports.” — Tom Sleight, U.S. Grains Council
Trading partners were confused further by indications some nations and/or products may be exempted from the tariffs at the discretion of the Trump administration.
Canada and Mexico were exempted, at least temporarily, as negotiations for a revised North American Free Trade Agreement continued. It seemed the Trump administration viewed their exemptions from the tariffs as contingent on a favorable NAFTA renegotiation.
It seemed Australia was exempted from the tariffs as well after a telephone conversation between Australian Prime Minister Malcolm Turnbull and Mr. Trump.
Several trading partners and close strategic allies of the United States such as South Korea and Japan also were seeking exemptions from the tariffs.
The views expressed by Sen. Pat Roberts of Kansas, chairman of the Senate Committee on Agriculture, Nutrition and Forestry, reflected those of many other members of Congress. “This proposal is not a tariff on steel and aluminum imports; it is a tax on consumers,” Mr. Roberts said. “As we have seen in past cases of increased tariffs, higher manufacturing costs will inevitably be passed down the supply chain, forcing consumers to bear these costs.”
"We are encouraged by the inclusion of a product-specific exclusion process, which could mitigate some impacts on food, beverage and consumer product packaging." — Roger Lowe, Grocery Manufacturers Association
Food and farm organizations voiced their concerns about possible retaliation in response to the tariffs.
“We have tremendous concern about the global ramifications of any new tariffs on ag exports,” said Tom Sleight, president and chief executive officer of the U.S. Grains Council. “Our products can compete on price and quality anywhere in the world, but the domino effects of new tariffs could make that much, much harder.”
Roger Lowe, executive vice-president, strategic communications, Grocery Manufacturers Association, said, “G.M.A. is relieved that the administration provided provisional exemptions to the steel and aluminum tariffs for Canada and Mexico and will establish a clear process for other key allies to apply for similar exemptions. We are encouraged by the inclusion of a product-specific exclusion process, which could mitigate some impacts on food, beverage and consumer product packaging. G.M.A. is still reviewing the effects of the announced tariffs on our member companies to see whether the flexibility provided in the proclamations will alleviate the most severe impacts of the tariffs on the prices of food, beverage and personal care products."