March 6–Increasing trade barriers puts the global economy at risk for a deep recession, World Trade Organization Director-General Roberto Azevêdo warned on Monday.
“In light of recent announcements on trade policy measures, it is clear that we now see a much higher and real risk of triggering an escalation of trade barriers across the globe,” told delegate heads meeting on the Doha negotiations. “We cannot ignore this risk and I urge all parties to consider and reflect on this situation very carefully. Once we start down this path, it will be very difficult to reverse direction. An eye for an eye will leave us all blind and the world in deep recession.”
New U.S. Tariffs on Steel & Aluminum
The remarks follow an announcement late last week by President Donald Trump that the United States would begin imposing import tariffs of 25 percent on steel and of 10 percent on aluminum.
The new tariffs would affect steel and aluminum imports from all countries, including Canada, Brazil and South Korea–the largest steel exporters to the United States. Companies affected include ArcelorMittal S.A. in Luxembourg, Angang Steel Co., Baosteel, and Jiangsu Shagang in China, Posco in South Korea, Nippon Steel Corp. and JFE Holdings in Japan, and Gerdau in Brazil.
Target China, U.S. Defense Dept Says
Trump’s proposed tariff increase would impact imports across-the-board without exception for key trading partners. Some members of the administration argued for a more targeted approach.
In an inter-agency memo last month, U.S. Defense Secretary James Mattis offered support for targeted tariffs and said they would not affect the Defense Department’s ability to purchase steel.
“DoD believes that the systematic use of unfair trade practices to intentionally erode our innovation and manufacturing industrial base poses a risk to our national security,” the memo said, as reported by Politico. “It is critical that we reinforce to our key allies that these actions are focused on correcting Chinese overproduction and countering their attempts to circumvent existing anti-dumping tariffs.”
China is the largest steel producer in the world, accounting for 50.3 percent of the world’s production in 2015, according to World Atlas. Most of the Chinese steel producers are owned by the state.
U.S.-Canadian Trade & NAFTA
The tariffs would hit Canada, the second largest U.S. trading partner, especially hard.Canada exports 40 percent of its steel to the United States.
The Canadian Steel Producers Association is concerned about a “severe” market impact on its steel producers. “If Canada does not immediately act to defend the domestic industry in this environment we should expect significant, generational harms to Canadian producers and employees as a result,” the association wrote to the Canadian government finance department on March 1.
In a March 5 phone call with President Trump, Canadian Prime Minister Justin Trudeau expressed “serious concern” about the proposed tariffs and warned that they “would not be helpful to reaching a deal on NAFTA,” according to an official statement about the call.
Trump, meanwhile, held his ground. Writing on Twitter on Tuesday, Trump strengthened his position about putting forward tougher trade deals.
“We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it’s time for change!”
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