Canada's Justin Trudeau accuses China of 'dumping' steel on global markets

Justin Trudeau Leo Varadkar

Irish Prime Minister Leo Varadkar shows off his colorful socks to Canadian counterpart Justin Trudeau. Rex Shutterstock

The European Commission on Monday again requested from Washington that the EU be exempted from additional duties on aluminium and steel that President Donald J. Trump signed into law last week. That is starting to change now, and the world fears he will do just that.

Trump wants to exploit that American advantage. South Korea had actually requested that the U.S. exempt it from the new steel tariff, in consideration of the ongoing negotiations to revise the Korea-U.S. FTA and their bilateral alliance.

Trump is not a NAFTA fan. Both-and others like them-promote the abolition of trade duties and tariffs. Stock markets and the global economy will experience shock.

The United States bought just 1.1 percent of China's steel exports previous year compared with 12 percent for South Korea and 5 percent for Japan, according to the U.S. International Trade Commission. As for Europe, the measures will have more of a "warning" effect. Alas, when things go wrong, it is easier to blame foreigners than oneself.

"More American workers lost their jobs in 2002 to higher steel prices than the total number employed by the USA steel industry itself (187,500 Americans were employed by US steel producers in December 2002)", the report concluded. Trump has made it impossible.

A trade war isn't going to level that field. Currently, US steel companies command only 2 percent of world exports, compared with 24 percent by China.

Steel and aluminum, along with coal, glass and solar panels, are among many Chinese industries that mushroomed until supply vastly outstripped demand.

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Last year, investors calmly brushed aside every surprise that came out of Capitol Hill or the White House. It does not matter to Trump that Europe can counter the argument, noting that the billions of dollars in military contracts in which Boeing partakes constitute a form of subsidy in themselves. The list could eventually run up to 100 products, the report added.

Officials at the trade body say it's too early to tell whether the United States is violating the organization's rules, mainly because it hasn't received a formal filing.

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Mrs Malmstrom's comments, however, came after Mr Trump accused the Brussels bloc of treating the U.S. "very badly on trade" and threatened to tax German cars. Today, we're taking one high-profile Wall Street pick and putting it under the microscope.

Here's a look at the WTO, and what's its role will be in the trade tussle. Who loses more here? Therefore, it would be foolish to assume that Beijing would simply take this in stride. As with many of Trump's economic ideas, the tariffs were driven by the misguided notion that all worldwide trade is a zero-sum game, wherein any benefit derived by a foreign partner must by its very nature have come at America's expense. Trump's principles are understandable.

The Australian exemption should never have been in doubt, and wouldn't have been under most other presidents.

Other trade partners, including Japan and China, have also voiced anger and pledged retaliation if the USA tariffs are enacted as expected on March 23. Having failed to appease Hillary Clinton voters and the "liberal establishment", Trump has chose to focus on those who voted for him. High tariffs enacted on electronics and clothing, which the US buys a lot of from China, would sharpen trade frictions and risk economic side effects in the USA such as inflation.

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The blue-collar workers of Pennsylvania are among them. Imported steel and aluminum strongly support the American manufacturing industry, enable hundreds of thousands of jobs in numerous sectors, and serve as the glue to many key trade relationships. President Obama himself demanded the European Union scrap the import regulations on hormone-filled meat.

Prevailing economic wisdom is that tariffs are bad for business and bad for the consumer, but increasing unease with the inequalities of globalisation has seen the move welcomed by many, particularly from Trump's Rust Belt supporters. "It is bad for European citizens, for Dutch citizens and it will turn out bad for US citizens as well".

As The Washington Times reported last December, "India is still using high tariffs and other protectionist measures to keep USA manufacturing goods from entering its domestic market". The fact that both Republicans and Democrats disagree with the tariffs could create a split.

Malmstroem held fruitless talks in Brussels on Saturday with US Trade Representative Robert Lighthizer aimed at defusing the row and avoiding an all-out trade war.

What happens to global growth if there's a trade war? In fact, the trade action is affected by the US president's decision.

Last year, South Korean exports of steel products to the USA amounted to 3.54 million tons worth 3.2 billion United States dollars.

Should Trump's tariffs stay in place for the long term, it is expected that the USA steel and aluminum industry will benefit, with under-capacity mills increasing output and idled plants restarting. So while some mills close, bigger rivals step up production and could become even more formidable global competitors.

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The risk is that many companies will use their tax savings to buy back stocks, fueling an artificial sense of optimism in the stock markets. Now that time is past, in President Trump's view, and, I suspect, in the view of most Americans.

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