MercoPress. South Atlantic News Agency

Trump speaks openly of a “trade war”; links tariffs on steel and aluminum to a redrafted Nafta

“For many years, NAFTA has been a disaster,” Trump said. “We are renegotiating NAFTA as I said I would, and if we don’t make a deal I will terminate NAFTA”

U.S. President Donald Trump said on Monday the U.S. is not backing down on its decision to impose 25% tariffs on steel imports and 10% tariffs on imported aluminum products. Before a White House meeting with Israeli Prime Minister Benjamin Netanyahu, Trump suggested Mexico and Canada could be exempted from the planned tariffs if a new and “fair” North American Free Trade Agreement (NAFTA) is reached.

“For many years, NAFTA has been a disaster,” Trump said. “We are renegotiating NAFTA as I said I would, and if we don’t make a deal I will terminate NAFTA. But if I do make a deal which is fair to the workers and to the American people, that would be, I would imagine, one of the points that we’ll negotiate. It will be tariffs on steel for Canada and for Mexico.”

The three countries are currently working to revise NAFTA, with the latest round of talks wrapping up in Mexico City. Trump’s decision to impose steep tariffs on steel and aluminum imports has drawn strong condemnation from some in his own Republican party and from U.S. trading partners around the world. Analysts warned the tariffs will hurt many U.S. allies.

From London British Prime Minister Theresa May in a phone conversation with President Trump raised UK's deep concern at the forthcoming announcement on steel and aluminum tariffs, noting “that multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests”.

In a rare break with the White House, House Speaker Paul Ryan and other key Republican lawmakers are trying to convince Trump to change his mind and not impose the tariffs. Ryan and the others say the tariffs would hurt consumers because they could lead businesses to impose higher prices and undercut any positive effect the recent Republican-approved tax cuts would have on the U.S. economy.

The motorcycle maker Harley-Davidson Inc. is headquartered in Ryan's home state and is being targeted by Europe in retaliation for Trump’s plan to impose steel and aluminum tariffs. Ryan spokeswoman AshLee Strong said in a statement, “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”

White House Press Secretary Sarah Sanders said the administration has a “great relationship” with speaker Ryan, but “that doesn’t mean we have to agree on everything.” Sanders added, “the President has been committed and talked about this for many years, particularly on the campaign trail, and the people came out loud and clear and supported this president, therefore supporting the policies he campaigned on.”

Sanders said the administration is still finalizing the details of the measure, and she did not want to provide more information on the decision ahead of the final announcement.

President Trump tweeted last Friday that “trade wars are good, and easy to win.” When asked to elaborate, Sanders said “the President feels if we ended up in a trade war, the President is confident we will win, but that's not the goal, the goal is to get “free, fair, and reciprocal trade, and hope other countries will join him.”

Trump told reporters he does not believe his plan to impose the aluminum and steel tariffs will spark a trade war.

Canadian Prime Minister Justin Trudeau said the tariffs are “absolutely unacceptable.”

In 2016, the last year with complete government statistics, the United States reported it sent US$12.5 billion more in goods and services to Canada than it imported, while it had a US$55.6 billion trade deficit with Mexico.

Canada is the largest U.S. trading partner and last year shipped US$7.2 billion worth of aluminum and US$4.3 billion of steel to the United States.

European Commission President Jean-Claude Juncker’s threatened the European Union could respond by taxing iconic American-made products, such as bourbon whiskey, blue jeans and Harley-Davidson.

To this, Trump responded, “People have to understand, our country, on trade, has been ripped off by virtually every country in the world, whether it’s friend or enemy, everybody. China, Russia, and people we think are wonderful, the European Union, we can’t do business in there, they don’t allow.”

Trump contended the EU has “trade barriers far worse than tariffs.” He said, “If they want to do something, we’ll just tax their cars that they send in here like water.”

Trump added, the U.S. lost US$800 billion a year on trade, and the biggest problem is China. He said, “we lost US$500 billion. How previous presidents allow that to happen is disgraceful, but we’re going to take care of it.”

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2% of overall U.S. imports.