China Promises “Necessary Response” to New US tariffs.

China has promised to issue a ‘justified and necessary response’ to U.S. President Donald Trump’s trade tariffs, expected to be imposed on steel and aluminum imports.

Chinese Foreign Minister Wang Yi implied that the tariffs will result in a harmful trade war, according to Reuters. He emphasized that in today’s globalized era, igniting a global trade war by issuing such destabilizing trade tariffs could hurt the smooth flow of international trade.

While China has been exporting steel and aluminum to the United States for years, prior anti-dumping duties and these national security tariffs are seen as a way to control the Chinese aluminum and steel production capacity, which has had a huge impact on global prices. Beijing has been categorical in opposing the tariffs by warning that the “section 23” national security tariffs can affect the normal order of international trade.

President Trump pressed on with the punitive import tariffs of 25% on steel and 10 % for aluminum on Thursday, but exempted Mexico and Canada. While offering the possibility of excluding other allies, Trump described the imports as dumping steel and aluminum in the U.S. market which he likened to insulting the United States.

In a White House announcement, Trump reiterated that domestic metals production was important to national security. He added that any company interested in producing these metals should move their plants to the United States. This news was received positively by steel and aluminum workers who were at the White House when the president made the announcement.

The president seemed to blame the steel and aluminum companies for the threat to national security that these companies perched on the United States through unregulated metal exportations. He urged any manufacturers who didn’t want to pay the tax to relocate their mills and smelters to the U.S. However, prominent members of the president’s Republican Party and influential business leaders have cautioned that implementation of the tariffs could spark reprisal from affected countries.

Soon after the White House announcement, U.S Republican Senator Jeff Flake, a hardened Trump critic responded that he would introduce a bill to quash the trade tariffs. Although it is a bold move, it’s likely to fail because the bill would likely require Congress to congregate a two-thirds majority to overrule a Trump veto.

Interestingly, the tariffs set to start on the 15th received support from some Democrats. Senator Joe Manchin of West Virginia praised the move, terming it a good step that is focused on protecting American workers. He said the president was doing his job of protecting the American citizens by proposing the tariffs. Trump made the announcement even after lobbyists, U.S. allies abroad and lawmakers raised their concerns about how the tariffs could escalate into a dangerous global trade war.

On the other hand, Canada, the largest exporter of aluminum and steel into the United States, welcomed the implementation of the tariffs. By exempting Canada and Mexico, the Trump Administration seemed to offer relief from tariffs to countries that treat the U.S. fairly on trade. In return, the U.S. expects Mexico and Canada to give ground in separate deliberations on negotiating the NAFTA talks. Mexican Economy Minister Ildefonso Guajardo said the North American Free Trade Agreement (NAFTA) talks should not yield to external pressure like the Trump’s trade tariff.

A majority of Americans who are concerned about national security matters have expressed support for the Trump trade tariffs. A senior official from the Trump administration advised other countries to consult with U.S. Trade Representative Robert Lighthizer concerning their steel and aluminum exports to the United States. He said that the consultations would be about how these countries can find alternative ways and create laws that can mitigate the threat to U.S. national security posed by their exports.

Trump, who won the presidency after a long career in reality TV and real estate, has long supported policies of economic nationalism, pledging to bring more jobs to the U.S., reviving the local industries and consequently save the nation from international trade deal he views as unjust. Some of these antagonistic approaches have put him at loggerheads with many prominent politicians in his own party, which is conventionally a supporter of free trade.


Ethan Warrick
Wealth Authority