Border Taxes – The Global Economy on the Brink of Trade War

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In the name of protecting national security, Washington has decided to impose, as of Friday, additional tariffs of 25% on steel imports and 10% on aluminum imports from the European Union as well as from Canada and Mexico. By carrying the sharpest blows against their allies, the United States has aroused indignation and misunderstanding within the Republican Party of US President Donald Trump.

“Today’s decision targets US allies when we should work with them to deal with the unfair trade practices of countries like China,” Speaker Paul Ryan thundered.

Ottawa was one of the first partners to actually respond by announcing taxes on $ 16.6 billion ($ 12.8 billion) of US products.

” A mistake “

Calling these taxes “unacceptable,” Canadian Prime Minister Justin Trudeau said they were “an affront to the longstanding security partnership between Canada and the United States, and an affront to the thousands of Canadians who have fought and perished alongside their Canadian brothers in arms. ”

Mr. Trump replied in a statement that it had been made clear to Mr. Trudeau that the United States would only accept “a fair deal”, otherwise “there will be no agreement at all”. “The United States has been exploited for many decades in the field of trade. These days are over, “warned the US president.

“We cannot understand that we, allies of the United States, can be struck by the US tariffs,” responded the French Minister of Economy Bruno Le Maire.

This decision is “a mistake” and is “illegal”, French President Emmanuel Macron told the US President in a telephone interview. He also confirmed the EU’s intention to respond “in a firm and proportionate manner”. “Economic nationalism is war,” had lashed before the meeting the head of the French state.

“An escalation that will hurt everyone”

German Chancellor Angela Merkel, for her part, was alarmed by “an escalation that will hurt everyone”.

“The United States leaves us no choice but to bring this dispute before the WTO (World Trade Organization) and to impose additional tariffs on products from the US,” said the President of the European Commission Jean-Claude Juncker.

“We had discussions with the European Commission and although we made progress, they did not go to the point where it would have been justified, either to extend the temporary exemption or to grant a permanent exemption”, justified US Secretary of Commerce Wilbur Ross.

G7 finance in Canada

“I met this morning Wilbur Ross and I made it clear to him that the countries of the European Union will never agree to negotiate under pressure,” said Bruno Le Maire.

In Berlin, the German government has also promised that the answer to America first will be “united Europe”.

Wilbur Ross has minimized the risk of retaliation by the target countries, who believe that imports from the EU are “little” compared to the US trade deficit (less than $ 3 billion).

Third partner of the Alena, Canada, which hosts G7 Finance until Saturday, intends to take advantage of this meeting of finance ministers to try to convince the Trump administration to reconsider their decision. The goal of the G7 was to debate how to “invest in economic growth that benefits everyone,” and “unfortunately we have to talk about tariffs,” said Bill Morneau, the Canadian minister.

“Harmful” taxes

“Customs taxes make no sense economically. They are harmful to Canadians, they are harmful to Americans, “he added.

Participating in the G7 Finance taking place in Whistler, a chic ski resort north of Vancouver, IMF boss Christine Lagarde denounced a form of “questioning the way the world has been working” for decades, based on “The principle of trust and cooperation”. Also warned that it is the poorest who would suffer from this trade war.

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