The implementation of tariffs on €2.8 billion of United States exports to the European Union starts on Friday. Some of the goods affected are orange juice, motorcycles, and bourbon whiskey.
European Commission imposed duties of the U.S. products after President Donald Trump announced that steel exports to America would be taxed with additional 25% and aluminum with 10%. European Commission president Jean-Claude Juncker lamented that the U.S. tariffs go against “all logic and history” and added that “we will do what we have to do to rebalance and safeguard” the EU, in his speech to Irish Parliament in Dublin.
President Trump justified the tariffs by pointing out the oversupply of steel and aluminum coming from China that threatens domestic producers. Taxes went in effect on June 1st and mostly affect America’s closest allies, like Canada, EU, Mexico, and India.
Some countries, like South Korea, Argentina, Australia, and Brazil, have relented under tariff threat from Washington and agreed to limit their steel and aluminum exports to the United States. Other have decided to impose retaliatory tariffs on American imports. Canada has placed C$16.6bn of the U.S. goods under tariffs, while Mexico has done the same for $3bn worth of American products.
India also imposed tariffs in place for steel and iron products and a range of agricultural products, like walnut, almonds, and chickpeas.
According to Trump, America’s trade partners are taking advantage of it by running a large trade surplus. American deficit has grown to about $50 billion in 2017, but that doesn’t necessarily have to be a bad thing. POTUS, however, claims that it is.
Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore. We must put the American worker first!
— Donald J. Trump (@realDonaldTrump) June 11, 2018
“Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore. We must put the American worker first!” he tweeted on June 11th.
Trump is especially rattled with a huge deficit his country has with China and has threatened to place tariffs on an additional $200 billion of Chinese imports unless Beijing starts to address the issue of trade deficit. China says that Trump is acting with “extreme pressure and blackmail” and said it would respond with “strong counter-measures,” going as far as to accuse him of racist motivation.
Despite Trump’s claims that tariffs won’t affect the population, experts don’t agree. Rick Helfenbein, president and chief executive officer of the American Apparel & Footwear Association, suggests that an average American family of four will spend additional $500 per year on these items because of the tariffs. It will also negatively affect the U.S. manufacturers that export their goods because their partners will likely seek alternative sources once American products go up in price due to retaliatory tariffs. In short, the taxes dispute has every ingredient needed for a trade war that will shake the global economy.