<p>Claims of an impending trade war erupted last week when President Trump announced steep tariffs on steel and aluminum.</p>
<p>To propose the tariffs without Congressional approval, Trump took advantage of a law ;that allows him to establish tariffs in scenarios where national security is threatened. ;</p>
<p>&ldquo;When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,&rdquo; tweeted Trump on Friday. In a later tweet, he criticized the &ldquo;very stupid&rdquo; trade deals negotiated by previous administrations that have contributed to our yearly trade deficit of $800 billion. ;</p>
<p>Commerce Secretary Wilbur Ross said the new tariffs &#8211; 25% on steel and 10% on aluminum &#8211; will have a &ldquo;trivial&rdquo; impact on the price of goods.</p>
<p>Other Administration officials, including Defense Sec. James Mattis and National Security Adviser HR McMaster, oppose the tariffs and have spent the past year trying to prevent them from happening. ;</p>
<p>Lawmakers from both parties also criticized the tariffs, arguing they would manifest as higher taxes and lost jobs. ;</p>
<p>Republican economist Larry Kudlow ;said the move is a ;&ldquo;blunt instrument&rdquo; that could have a negative impact on US consumers and companies. &ldquo;Tariffs are taxes &#8211; and the ones that suffer most are the users&hellip;it will be painful.&rdquo;</p>
<p>Ford Motor Company warned the steel tax could harm the &ldquo;competitiveness of American manufacturers.&rdquo;</p>
<p>House Speaker Paul Ryan (R-WI) warned of &ldquo;unintended consequences&rdquo; and has urged Trump to consider other approaches before moving forward. ;</p>
<p>The plan is a &ldquo;huge job-killing tax hike,&rdquo; argues Utah Senator Mike Lee (R). &ldquo;While I am sympathetic to the issues facing domestic steel manufacturers, there must be a better way to address the steel industries concerns, and I hope Congress and the executive branch can identify an alternative solution before these tariffs are finalized next week.&rdquo; ;</p>
<p>Ohio Senator Rob Portman (R) expressed similar concerns, pointing out that his home state has already lost &ldquo;1,500 steelworkers in the last couple years.&rdquo; Instead of taxing all countries equally, the Administration should consider a &ldquo;more targeted approach as to the product and as to the country where it&rsquo;s coming from,&rdquo; he added. ;</p>
<p>In a statement Friday, World Trade Organization Director General Roberto Azevedo said the WTO &#8220;is clearly concerned at the announcement of US plans for tariffs on steel and aluminum&#8230;The potential for escalation is real, as we have seen from the initial responses of others.&rdquo;</p>
<p>Canada, which buys more American steel than any other country, has already blasted Trump&rsquo;s plan as &ldquo;absolutely unacceptable.&rdquo; ;</p>
<p>European Commission President Jean-Claude Juncker promised Europe would respond to the new tariffs by taxing American exports like &ldquo;bourbon,&rdquo; &#8220;Harley-Davidson,&rdquo; and &ldquo;blue jeans.&rdquo;</p>
<p>President Trump responded to Juncker&#8217;s threat by promising to tax European cars. &ldquo;If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a Tax on their Cars which freely pour into the US,&rdquo; he tweeted Saturday. ;</p>
<p>Exports account for about 12% of the US economy, so a widespread reaction from trade partners could have a big impact on the economy. ;</p>
<p>Particularly vulnerable is the agriculture sector, which depends heavily on exports. ;</p>
<p>Major steel exporters to the US such as South Korea, Japan, and Canada, are also big importers of American agriculture. If these countries are looking for a way to punish the US, agriculture is going to be a tempting target. ;</p>
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<p>While the new tariffs will apply to all countries equally, Administration officials have suggested they are ;prepared to consider exemptions on a case-by-case basis. ;</p>
<p>President Trump will unveil the details of his plan sometime this week. ;</p>
<p><strong>Author&#8217;s note: ;</strong>Trump is being a bit of a protectionist with steel, but he is keeping his campaign promise to protect US steel production. With some luck, the new tariffs will ;spur investment and modernization in America&#8217;s steel industry. The threats by our trading partners may or may not be real, but Trump is a brutal negotiator and everyone knows it.</p>