GENEVA – The World Trade Organization warned Friday that U.S. President Donald Trump is risking an economically damaging trade war if he goes ahead with plans to impose steep tariffs on steel and aluminum imports.
Trump, who has long railed against what he deems unfair trade practices by China and others, said Thursday he planned to levy penalties of 25 per cent on imported steel and 10 per cent on aluminum imports from next week.
Roberto Azevedo, the director-general of the Geneva-based WTO, said the agency was “clearly concerned” at the U.S. plans and warned that “a trade war is in no one’s interests.”
“The potential for escalation is real as we have seen from the initial responses,” he said in comments emailed to The Associated Press by a WTO spokesman.
Azevedo said the WTO, the body that oversees global trade, “will be watching the situation very closely.”
By taking on Trump’s remarks directly, Azevedo is signalling a tougher stance toward the U.S. leader. The Brazilian-born lawyer has often treaded delicately when referring to Trump’s leadership of the world’s largest economy — even reacting cautiously when Trump criticized the WTO on the campaign trail.
Azevedo has shown growing frustration in recent months over U.S. efforts to block new appointments to the organization’s appellate body — a move that could hamper one of its key roles: resolving disputes.
His more muscular language follows a flurry of worries from key U.S. trading partners in Europe over Trump’s tariff plans.
The European Union is already thought to be considering retaliatory tariffs, roughly one third of which would target steel, one third agriculture, and one third other products.
“We are not going to sit on our hands while our industry is at risk of being hit with unfair measures,” said European Commission spokesman Alexander Winterstein.
His boss, European Commission chief Jean-Claude Juncker, suggested the 28-nation trade could also target typically American products such as Harley Davidson motorcycles, Bourbon whiskey and blue jeans.
“I don’t like using the word trade war, but I can’t see how this isn’t part of war-like behaviour,” Juncker told German media ahead of a planned speech late Friday in Hamburg.
French Finance Minister Bruno Le Maire confirmed he was planning to talk with counterparts in Germany and Britain about how to respond if the U.S. imposes tariffs.
“The United States must know that if these unilateral decisions were to be maintained and confirmed, they would lead to a strong, co-ordinated and united answer from the European Union,” Le Maire said in Paris.
Trump didn’t appear too concerned about the prospect of a trade war, even with a key partner such as the EU.
In a tweet early Friday, he said “when a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”
In his run to the presidency, Trump argued vociferously that increased foreign production, especially by China, had driven down prices and hurt U.S. producers.
Financial markets have taken fright at the prospect of a trade war, though — Germany’s DAX index, for example, closed down 2.3 per cent in Frankfurt, as investors fretted over the impact on Germany’s export-heavy economy. German producers account for about 4 per cent of U.S. steel imports. European officials are arguing that EU firms would be unfairly punished by any blanket tariffs that emerge.
“Unlike possibly other countries, there’s no unfair competition or dumping prices from German or European firms,” German Foreign Minister Sigmar Gabriel said.
“The threat of difficult trade strife between the U.S. and Europe is neither in the interest of Europe or the U.S. As the saying goes: ‘when two fight with each other, it pleases the third,'” he added without naming any specific countries.
Overall, the 28 EU nations make up nearly 21 per cent of U.S. steel imports, according to the German Steel Federation, and Gabriel said the tariffs could “endanger thousands of jobs in Europe.”
Hans Juergen Kerkhoff, president of the German Steel Federation, said the tariffs would violate WTO rules and urged the EU to take action.
Though only 5 per cent of German steel exports go to the U.S., he warned of a knock-on effect that would stoke “protectionism worldwide.”
The American Chamber of Commerce to the EU, which represents U.S. firms doing business in Europe, said it shared Trump’s concern about global overcapacity, but that his proposal would “unfairly target European manufacturers and would not address Chinese excess capacity, the root cause of the issue.”
“Unilateral U.S. government actions would fail to address this issue and instead risk harming America’s relationship with Europe, its staunchest ally,” the organization’s head Susan Danger said.
WTO spokesman Dan Pruzin told reporters in Geneva that the agency has never had to deal with a case challenging any member’s right to invoke the organization’s exception allowing tariffs in cases of national security. The U.S. Commerce Department has described the situation as just that — a national security threat.
“If any of our members have any concerns about any actions adopted by another member, they can raise this in the WTO,” he said, refusing to comment directly on Trump’s plans.
Dieter Kempf, head of the Federation of German Industries, urged all sides to “keep a cool head.”
“There’s too much at stake,” he said. “Nobody is an island, the global economy is closely networked.”
Rising contributed from Berlin. Frank Jordans in Berlin, Lorne Cook in Brussels and Sylvie Corbet in Paris contributed to this report.