President Donald Trump’s administration is heading into the weekend with a lot of knots to untangle. On Tuesday, the United States declared the trade war with China was back on, and by Thursday, Commerce Secretary Wilbur Ross announced tariffs on steel and aluminum imports from Mexico, Canada, and the European Union.
The president signaled his support with a tweet:
FAIR TRADE!
— Donald J. Trump (@realDonaldTrump) May 31, 2018
Ross, by the way, is headed to Beijing on Saturday to engage the third round of trade negotiations with China that are once again going downhill after the brief freeze announced by Treasury Secretary Steven Mnuchin, who put it on hold on May 20 as both sides looked for a solution for the $375 billion trade gap that favors China.
Even as White House Economic Adviser Larry Kudlow tried on Friday to recast the trade wars as some sort of “family disagreement,” the countries at the sharp end of U.S. policy responded with a mixture of wrath and indignation.
China reacted angrily on Wednesday to the news that the trade war was restarted, and Thursday’s announcement that tariff exemptions sought by Canada, Mexico and the European Union would not be granted were met with a similar response.
Canadian Prime Minister Justin Trudeau wasted no time in reminding the press that the United States has a $2 billion trade surplus over his country in steel trade, and that Canada is the number one customer for U.S. steel.
“Let me be clear: These tariffs are totally unacceptable,” said Trudeau, who along with his Mexican counterparts, has been working to save the North American Free Trade Agreement (NAFTA), but to no avail.
Trudeau canceled a scheduled trip to the United States this week for NAFTA talks, after Vice President Mike Pence called the prime minister to convince him that a renegotiated deal would have to be renewed every five years. In backing out of the trip, Trudeau dashed any hopes the Trump administration had of getting a renegotiated deal sooner rather than later.
Ontario Premier Kathleen Wynne struck a less diplomatic tone, calling Trump “a bully” against which the Canada will push back.
“[W]e’ve all had just about enough of Donald Trump,” she said. “The reality is that our federal government has moved heaven and earth. They’ve cajoled Trump, they have soothed his ego, they’ve played to his apparently inexhaustible vanity. The time for talk is done.”
Mexico, still seething from Trump’s repeated demands that it pay for a border wall (“Not now, not ever” tweeted President Enrique Peña Nieto), also replied by slapping its own tariffs on long list of U.S. goods, from flat steels to cheeses, calling the U.S. measures “neither adequate nor justified.”
The Trump administration also imposed the same tariffs on the European Union, even as it seeks E.U. cooperation on killing the 2015 Iran nuclear deal known as the Joint Comprehensive Plan of Action (JCPOA). Despite warnings that they would respond with $3.4 billion in tariffs on U.S.-made goods, such as bourbon, motorcycles and denim, Trump nonetheless pushed ahead with tariffs on steel and aluminum imports.
The trade wars have already caused dips in the global markets as bourbon distillers in the United States say that even the threat of E.U. tariffs has already hurt their businesses.
French President Emanuel Macron, who had tried to talk Trump out of the tariffs during his White House visit in April, called the tariffs “illegal” and “a mistake.” On Wednesday, Secretary Ross told reporters in Paris that even with tariffs in place, the European Union should continue negotiating with the United States, as China is.
But that comparison doesn’t have much traction among the Europeans, with one source in Macron’s office telling Reuters that the European Commission wasn’t interested in the “brutal bilateralism” the United States is pursing, adding that “what we see so far is that China doesn’t seem to have given away much.”
France’s Finance Minister Bruno Le Maire, told reporters, “World trade is not like the settling of accounts at the OK Corral,” while European Commission chief Jean-Claude Juncker slammed the United States for “imposing unilateral measures when it comes to world trade.”
E.U. trade chief Cecilia Malmstrom said on Friday that the tariffs are “pure protectionism” by the Trump administration. The European Union has opened a case before the World Trade Organization (WTO), disputing the tariffs and hoping for a settlement.
Secretary Ross laughed off the move, according to Reuters. He pointed to a 14-year dispute of subsidies for Airbus as indicative of what “a joke” the WTO’s dispute mechanism is.
President Trump is not a fan of the WTO, and under his administration, the United States has blocked key appointments to the global trade regulatory body, thereby crippling the WTO’s ability to settle disputes.
Still, whether and if a settlement is reached via the WTO or a flurry of talks, what’s clear is that the trade wars the United States is now facing on the three continents might redraw global alliances in ways that the Trump administration perhaps did not anticipate.
The Chinese, for one, have already started lining up European and Asian partners to deal with the tariffs. And in what might be seen as a helping hand to the European Union in trying to save the Iran deal, China might step in to take over the gas field shares left by France’s Total, which just pulled out of Iran, fearing U.S. sanctions.
And all of this happening just as the Trump administrations is working on making talks with North Korea happen on June 12, hoping to negotiate dismantling Pyongyang’s nuclear weapons program — an agreement that would require China’s participation, as North Korea’s neighbor and largest trading partner.