Sun, Jun 03, 2018 - Page 5 News List

EU joins battle against Trump tariffs

G6 PLUS ONE:Some economists are saying that the effects of the trade war would be minimal, although Trump’s ‘contempt for rules’ might hurt business confidence

AFP, WHISTLER, British Columbia

Delegates pose at the G7 ministers’ summit on Friday in Whistler, Canada.

Photo: Reuters

The EU on Friday launched its first counteroffensive against Washington’s steel and aluminum tariffs, while the US began meetings in Canada with outraged finance ministers from its top trading partners.

Meanwhile in Washington, US President Donald Trump floated the possibility of scrapping the 24-year-old North American Free Trade Agreement in favor of separate bilateral deals with Canada and Mexico.

On another front, US Secretary of Commerce Wilbur Ross arrived in Beijing to continue fraught talks with Chinese officials. Trump has vowed to press ahead with tariffs on as much as US$50 billion in imports from China.

Brussels and Ottawa on Friday filed legal challenges at the WTO against Washington’s decision. The EU, Canada and Mexico also threatened stiff retaliatory tariffs.

At the G7 meeting in Canada, US Secretary of the Treasury Steven Mnuchin faced stern reactions from his counterparts, who accused Trump of jeopardizing the world economy with steps that would prove job killers for all concerned.

“The French, British and Germans held firm,” French Minister of the Economy and Finance Bruno Le Maire told reporters. “Everyone expressed their complete incomprehension of the American decisions and everyone said it was up to the Americans to take the next step, since they were the ones who imposed the tariffs.”

Le Maire had earlier on Friday referred to the talks as a “G6 plus one,” with the US standing apart, adopting a joke circulating among attendees at the weekend.

Talk of trade did not completely drown out the meeting’s agenda, which included tax evasion and cryptocurrencies, but the meeting’s chair, Canadian Minister of Finance Bill Morneau, allowed participants to register grievances with Mnuchin one at a time, a Canadian source said.

The EU is preparing to slap tariffs on US products, including bourbon, motorcycles and blue jeans, worth up to 2.8 billion euros (US$3.27 billion).

“If players in the world don’t stick to the rule book, the system might collapse. That is why we are challenging the US and China at the WTO,” EU Commissioner for Trade Cecilia Malmstrom said.

The prospect of a global trade war has roiled financial markets this week, even if they were back in positive territory on Friday due to upbeat US economic data.

The direct effects of a US-EU trade war on the world economy would actually be rather small, Berenberg Bank economist Holger Schmieding said, but added: “Trump’s contempt for international rules can deal a significant blow to business confidence, especially in trade-oriented nations.”

Former WTO director-general Pascal Lamy also said that the damage would likely be limited in concrete terms.

“We have to keep things in proportion,” he told the French radio station France Info, estimating that the economic effects of the tariffs would amount to “a very small part of trade flows as a whole.”

However, others have estimated the effect as up to a full point off global growth if the conflict expands and retaliation goes into effect.

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