UK Premier May warns Trump over imposing tariffs

Britain’s PM Theresa May has stepped into a growing international trade row, telling US President Donald Trump of her “deep concern” over his plan to raise tariffs on steel and aluminium imports. Stocks across the world sank after Trump revealed his intention to impose a 25 per cent tariff on steel imports and 10 per cent tariff on aluminium. In addition, Trump also attacked the European Union, threatening to “apply a tax” on imports of European cars.
The move chimes with Trump’s so-called America first policy. He has pledged to pursue protectionist measures popular with some US workers. The controversial US President tweeted that America is “losing billions of dollars” due to current trade arrangements, adding: “trade wars are good, and easy to win”. In a phone call to Trump, May took issue with the President’s decision over the tariffs.
A spokesperson from May’s office said: “The Prime Minister raised our deep concern at the President’s announcement on steel and aluminium tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests.” Trump said the levies will take effect in about 15 days. He singled out Germany for criticism, accusing them of behaving ‘unfairly’ by contributing much less than America towards the funding of Nato.
He said Australia, Canada and Mexico could be exempt. “We have a very close relationship with Australia, we have a trade surplus with Australia, a great country, a long-term partner. We’ll be doing something with some other countries,” he added. Theresa May would like Britain, anxious to agree a post-Brexit trade deal with the US, to be one of those ‘other countries’. However, UK officials have been unable to find a legal means of achieving that while it remains inside the EU.
Trump’s aggressive approach to trade has attracted criticism from within the Republican party. More than a hundred Republicans have written to Trump urging him to drop the tariff plan. And Unicredit economist, Erik Nielsen said the developments “mean that the risk of a more decisive shift towards protectionism, and therefore isolationism, has increased considerably.” Global growth could easily drop back by one percentage point” on the back of a Trump-induced trade war, Nielsen added.
In January the World Economic Forum, held in Davos, highlighted the possible emergence of trade wars as one of the biggest risks facing the global economy. Meanwhile the Economist Intelligence Unit’s “Cause for Concern” report cited a decline in global trade thanks to US protectionism as a key threat to global economic health in 2018.
While the US President is thinking that his tariffs will protect jobs in his country, other nations will be retaliating, hitting exporters and crippling other industries. It will also be a blow to domestic consumers, and manufacturers requiring imported goods, who will see prices sharply rising. In the case of steel tariffs, US car makers and industrial firms immediately saw their shares drop, while business groups slammed Trump’s decision.
It has not caused him concern, it would appear at present, but he may, before long find out how wrong he is. The European Union has hit back, with trade commissioner Cecilia Malmstrom threatening EU tariffs on US imports of Levi’s jeans and bourbon, both are big sales products from America. She also said the EU still hoped to avoid a full-blown trade war.
Malmstrom, a veteran of trade talks with the US, said she was eager to avoid an escalation in the war of words between Washington and Brussels over tariffs, saying: “We do not want this to get out of proportion.” But she said the EU, a major trading partner, needs to have re-balancing measures ready to safeguard the EU economy and protect jobs. “We cannot just stay silent when such a major measure could be taken to the EU economy,” she said.
Malmstrom said a provisional list of US products that could face EU tariffs is being drawn up and will be published after consultation with the member states. Donald Tusk, the president of the European Council, also had his say, urging “politicians on both sides of the Atlantic to act responsibly.” From the start of his presidential campaign, Trump’s slogan has been “America first.” But the fact that it was foreseeable does not make it less alarming.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)