The US and China Are Finally Having It Out

Aubrey Yates
May 3, 2018

Several U.S. trading partners are pushing the White House for a permanent exemption on inbound tariffs of steel and aluminum one day after President Donald Trump made a decision to postpone their implementation.

The Trump administration pushed the decision to June 1 for the European Union, Canada and Mexico, while reaching preliminary agreements with several other US allies ahead of a looming midnight deadline.

South Koreans were reportedly horrified by a story, a couple of months back, that Trump had suddenly declared that he wanted to withdraw all US troops from the Korean Peninsula; this may be what motivated Seoul to seek an agreement with North Korea, even at the risk of strengthening and emboldening Kim Jong Un. As of today, however, the US has reached a deal with two of the top three sources of foreign steel: Brazil (in principle) and South Korea.

A recent NRF and CTA study examined the consumer impact of proposed tariffs on television sets and other products from China.

Farmers for Free Trade, a bipartisan grassroots campaign, released a report on April 24 that highlights the significant impact Chinese retaliation from the steel and aluminum tariffs would have on U.S. wine, almonds, walnuts, pork, cherries and some other commodity producers.

The EU and United States should "develop a positive trade agenda in the interests of both sides", Steffen Seibert, Merkel's chief spokesman, said on Twitter Tuesday.

At the time, Trump excluded several vital trading partners - the EU, Mexico, Canada, Australia, Argentina and Brazil - from the tariffs.

In early April, President Trump directed Lighthizer to look at the potential of imposing $50 billion of tariffs on Chinese imports. But in case the Trump's administration imposes tariffs on steel imports worth of 6,4 billion euros, then the European Union will respond by setting levies on 2.8 billion euros of American exports including peanut butter and denim jeans.

The Trump administration is attempting to impose quotas instead of tariffs on six major United States trading partners.

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U.S. President Donald has extended a period in which some countries will not pay import taxes, or tariffs, on some products.

"If you just do nothing, we know how that turns out: more and more trade deficits", he said.

United States officials have highlighted Beijing's "China 2025" industrial development plan as a source of concern - Ross called it "frightening" - since they say it is a map for dominating key high tech industries.

In formal proclamations, Trump mentioned the "needed and applicable means to handle the menace to the nationwide safety" posed by the steel imports is to "proceed these discussions and to increase the momentary exemption of those nations".

The EU has taken a tough stance, raising the prospect of a trade war if the US does not back down.

Trump wants to break from past administrations that have talked about leveling the trade playing field with China but taken little action, Ross said in the interview.

On Tuesday, the European Commission issued a statement that said, "as a longstanding partner and friend of the USA, we will not negotiate under threat".

Beyond the revenue problem, a quota system opens the door for corruption, said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

The US and European Union have complained for years that Chinese steel producers unfairly benefit from state subsidies and dump their products on the world market.

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