USA allies vow to fight tariffs plan, warn of trade war

INDUSTRY Steel

"This is stupid. It's counterproductive", former British trade minister Francis Maude told BBC. "This is exactly what happened in the 1930s (prior to World War II)".

Tariffs of 25 per cent on steel imports and 10 per cent on aluminium were due to be imposed on the EU, Canada and Mexico from 0400GMT on Friday.

The administration's move threatens to inflate prices for USA consumers and companies and heighten uncertainty for businesses and investors across the globe. Trade war fears drove Chinese shares lower on Friday.

"We look forward to continued negotiations with Canada and Mexico on one hand and with the European Commission on the other hand as there are other issues we need to get resolved", the commerce secretary said.

Echoing Canadian President Justin Trudeau, Malmström said that the tariffs would hurt jobs in the U.S.as well.

The Commission intends to file a dispute settlement request before the WTO against the USA tariffs and plans to activate its own tariffs against United States exports worth €6.4 billion, to equal the economic impact of Trump's duties.

Steel workers return to work after a two-year idle at U.S. Steel Granite City Works in Granite City, Ill., last Thursday.

Trump had offered the two United States neighbors a permanent exemption from the tariffs if they agreed to U.S. demands on NAFTA, but the talks have stalled.

All six of the other G7 countries are paying the tariffs, which are largely aimed at curbing excess production in China.

"The government of Canada is confident that shared values, geography and common interests will ultimately overcome protectionism", Trudeau said.

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The EU has already issued a 10-page list of tariffs on USA goods ranging from Harley-Davidson motorcycles to bourbon.

The UK's Secretary of State for International Trade Liam Fox told Sky News it, too, is considering retaliatory measures and joining the EU's complaint with the WTO. "It was not... We believe in the G7, it's an important group", Mnuchin said.

The tariffs take effect on July 1 and will last until the United States ends its move. He estimated that the economic impact of the tariffs would amount to "a very small part of trade flows as a whole".

Washington and Beijing have threatened tit-for-tat tariffs on goods worth up to $150 billion each.

Rather than working with our friends to solve difficult trade disputes, President Trump has come down harder on them than on China-the real trade violator-and opened the door for Vladimir Putin to undermine America's relations in Europe and around the world.

On Friday, the United States' closest allies attacked the Trump administration for imposing tariffs on steel and aluminum imports, with Japan calling the US actions' "deeply deplorable". But the NAFTA talks stalled.

In the end, "this fight is not going to be resolved through diplomacy or at the G7 next week; it's going to be political developments in the United States", he added, noting that Canadian tariffs on USA consumer goods aimed to sway voters in key districts in the upcoming U.S. mid-term elections. Late on Thursday, Trump issued a statement about the NAFTA negotiations, saying the days of the United States being taken advantage of on trade were over.

"Even if the USA were to levy a 25 per cent tariff on auto imports from the EU, the direct damage to be shared largely between USA consumers and EU exporters would be equivalent to 0.08 per cent of EU GDP", he calculated.

Soaring demand for lumber from the booming US housing construction sector, where housing starts were higher than they have been in a decade past year, has helped pushed prices to record highs.

And the tariffs will allow domestic steel and aluminum producers to raise prices, squeezing companies - from automakers to can producers - that buy those metals.

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