When Trump proposed his controversial tariffs on steel and aluminum in March, he suggested allies Mexico and Canada could earn exemptions by renegotiating NAFTA. European allies had also hoped to negotiate for exemptions.
On Thursday, the Trump Administration announced a 25% tariff on steel and a 10% tariff on aluminum would be going into effect for Mexico, Canada, and the EU starting Friday. These are the same tariffs he slapped on China in March. Like China, Mexico and the EU have already vowed to impose retaliatory tariffs on US exports.
“Mexico deeply regrets and condemns the decision of the United States to impose these tariffs on imports of steel and aluminum from Mexico from June 1, at the discretion of national security,” said the Mexican government in a statement.
European Commission President Jean-Claude Juncker called the move “protectionism, pure and simple” and made it clear EU leaders would pursue a complaint with the World Trade Organization.
In 2017, nearly 50% of US steel imports came from Mexico, Canada, and the EU. China, which is already subject to stiff trade penalties, ranks #10 on steel imports to the US. In other words, our allies stand to lose a lot more money from this than China.
Opponents claim the tariffs are a tax hike on American citizens and fear they will ignite trade wars with our allies. “Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” said Senator Ben Sasse (R-NE).
Commerce Sec. Wilbur Ross insists the tariffs will not interfere with future negotiations.
“Take the example of China: the tariffs that we’ve imposed went into effect on China on the 23rd of March and…we have continued to have trade negotiations with China. So the fact that we took the tariff action doesn’t mean that there cannot be negotiation,” said Ross. “We look forward to continued negotiations with Canada and Mexico on one hand and with the European Commission on the other hand, as there are other issues we need to get resolved.”
Among those “issues” are NAFTA negotiations, which have yet to make any real progress, and Germany, which exports far more steel to the US than any other European country.
“We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military,” tweeted Trump on Wednesday. “Very bad for US. This will change.”
Trump also suggested he would withdraw the tariffs on EU countries if those countries “drop their horrific barriers & tariffs on US products.” If they do not, we will tax German cars, “which freely pour into the US.”
According to a report published Thursday by German magazine WirtschaftsWoche, Trump told French President Emmanuel Macron last month that he intended to stop imports of German luxury cars until there are no more Mercedes-Benz driving down Fifth Avenue in New York. Shares of Porsche, Daimler, and Volkswagen dropped hours after the report was published.
South Korea, Brazil, Argentina, and Australia will remain exempt from the tariffs (at least for now).
Editor’s note: Trump is ramping up the negotiation strategy, moving his positions to optimize the final result. Some people may be surprised, but frankly, I’m not.