WASHINGTON — Concerns mounted that jolting swings in U.S. trade policy and the reaction of trading partners, both those considered longstanding allies and those viewed as adversaries in the geopolitical sphere, have brought the world closer to trade war. The last couple of weeks in May and the first week of June saw rapid deterioration in this nation’s trade relationships with Europe, Mexico, Canada and China.
On May 31, President Donald Trump imposed increased tariffs on steel and aluminum imports — 25% on steel and 10% on aluminum — from the European Union, Canada and Mexico. The E.U. and the United States’ partners in the North American Free Trade Agreement, Canada and Mexico, had been exempted from the increased tariffs that for other countries, except those who agreed to accept limits on their exports to the United States, went into effect in April.
The condition for the exemptions was that progress had to be made in addressing what the Trump administration said were legitimate concerns over U.S. national security, which the administration asserted was endangered by large imports of steel and aluminum. The E.U. refused to acknowledge the national security justification for the tariffs and would not agree to limit its exports to the United States.
The exemptions given Canada and Mexico were to prod those countries into agreeing to a new NAFTA that would include a provision requiring the agreement be renegotiated every five years. This provision was a deal breaker for both the Canadian and Mexican governments. The impasse in the NAFTA talks triggered Trump’s decision to impose the tariffs on Canada and Mexico as well.
The E.U., Canada and Mexico indicated they would retaliate by imposing tariffs on U.S. goods roughly equivalent to the value of their aluminum and steel exports to the United States.
The E.U. earlier issued a 10-page list of U.S. imports that would be subject to increased tariffs in the event the United States lifted its exemption to the increased tariffs on steel and aluminum shipped to the United States. Corn and rice were among U.S. agricultural exports targeted.
The Canadian government said it would impose surtaxes or similar trade-restrictive countermeasures against up to C$16.6 billion ($12.9 billion) in imports of steel, aluminum and other products from the United States. The Canadian list of target products included agricultural products, including some dairy products, but emphasized industrial and other products.
The Mexican government said, “Faced with tariffs imposed by the United States, Mexico will impose equivalent measures to various products such as flat steel, lamps, pork legs and shoulders, sausages and food preparations, apples, grapes, blueberries, various cheeses, among others, up to an amount comparable to the level of affectation.”
China’s aluminum and steel exports to the United States were subjected to increased tariffs in April. China’s retaliation included a 25% tariff on U.S. pork products.
President Trump since threatened to impose tariffs on an additional $50 billion worth of Chinese products if talks between the two nations did not produce an agreement that would reduce the U.S. trade deficit with that country. The latest of a series of high-level negotiations ended last week with no agreement in sight.
Jim Heimerl, president of the National Pork Producers Council and a pork producer from Johnstown, Ohio, reacted to Mexico’s decision to impose increased tariffs on U.S. pork products, saying, “The toll on rural America from escalating trade disputes with critically important trade partners is mounting. Mexico is U.S. pork’s largest export market, representing nearly 25% of all U.S. pork shipments last year. A 20% tariff eliminates our ability to compete effectively in Mexico.”
Vince Peterson, president of U.S. Wheat Associates, added, “It is dismaying to see that common sense has not yet prevailed in preventing these protectionist measures. We’ve spent decades in critical markets like Mexico, Japan, Europe and others because we’re committed to a lasting trading relationship between their milling and processing sectors and our farmers. If this administration isn’t careful, decades of efforts by our farmers could be wasted.
“If this approach doesn’t change, U.S.W. worries that the ambitious bilateral trade agreement agenda, which was promised and which we all look forward to, will never get off the ground because no country will be willing to take the political risks needed to negotiate an agreement with the United States.”
Even as the ramifications of the recent trade actions were being considered, the Department of Commerce, at the direction of President Trump, has launched a Section 232 investigation into whether the imports of automobiles and parts also constitute a threat to the national security of the United States, which could signal a new stage in what may be an unfolding trade war.