Saturday, June 23, 2018
THE TARIFFS WARS
Shoppers are facing higher prices on jeans, bourbon, orange juice and peanut butter as Theresa May backed EU trade reprisals against the US that come into force today.
Brussels has slapped higher duties on around £2.5billion of typical American products in retaliation for Donald Trump's decision to impose tariffs of 25 per cent on steel and 10 per cent on aluminium.
But the spat is on the verge of erupting into a full-blown trade war this afternoon after the US president vowed to hit car imports with a 20 per cent tax.
The dramatic escalation could potentially deal a devastating blow to the UK, as 15 per cent of all car exports end up in the US.
Taking to Twitter this afternoon, Mr Trump said: 'Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!'
Germany is responsible for just over half of the bloc's car exports.
But nearly 15 per cent of the 90,000 cars exported from the UK each year go to US markets.
Hundreds of thousands of jobs in Britain rely on the car industry, with companies such as Nissan and Honda operating major plants.
Shares in car firms such as Volkswagen and BMW dropped sharply after Mr Trump's tweet - although they did recover to some extent amid speculation that he might not be able to follow through on the threat.
Earlier, the Prime Minister's spokesman denied that the EU move was 'tit for tat' or excessive.
‘We believe plans the EU have put forward are measured and proportionate,’ the spokesman said
Mrs May is also expected to raise the issue of trade when Mr Trump comes to the UK for the first time next month.
'The Prime Minister will use the opportunity of the President’s visit next month to discuss trade,’ the spokesman added.
Mr Trump's assault on imports came as he pushed his case that the US is being fleeced by the rest of the world, who refuse to open their own markets.
Next month the US will impose higher taxes on billions of pounds worth of Chinese goods, with Beijing vowing to hit back by targeting American soy beans and other farm products.
But the EU has unveiled a raft of countermeasures intended to hit US products from industrial heartlands that tend to be Trump strongholds.
The majority of US goods targeted, such as tobacco, jeans, Harley Davidson motorcycles, cranberries and peanut butter, will face a tariff of 25 per cent.
Pleasure boats and make up are also being charged at that rate.
However, 50 per cent is being imposed on footwear, some types of clothing, toilets and washing machines.
Among dozens of specific sanctions, playing cards and hairspray are facing a 10 per cent levy.
Orange juice seems to have been picked out by Brussels as it is a major export for Florida, a swing state in US elections.
The impact on prices in the UK will depend on how much of the extra costs are absorbed by the manufacturers and retailers.
However, they will inevitably be pushed up to some extent.
India has said it will hike taxes on 29 products imported from the US - including some agricultural goods, steel and iron products.
South Korea, Argentina, Australia and Brazil have agreed to put limits on the volume of metals they export to the US in order to avoid levies.
A fortnight ago Mexico put tariffs on around £2.2billion worth of American products such as steel, pork and bourbon.
Mrs May was among a group of premiers, spearheaded by German Chancellor Angela Merkel, who berated the US president over his imposition of punitive steel tariffs at a bad-tempered G7 summit earlier this month.
The powerful group of countries - the US, UK, France, Germany, Japan, Canada and Italy - eventually hammered out a statement committing to 'free, fair, and mutually beneficial trade' and tackling protectionism.
But within minutes Mr Trump dramatically condemned the communique and launched a furious attack on Canadian host Justin Trudeau.
Despite the differences, Mr Trudeau announced that the leaders had managed to agree a joint communique at the summit which highlighted the importance of 'free, fair and mutually beneficial trade and investment' and said the G7 would 'continue to fight protectionism'.
He said: 'We had some strong, firm conversations on trade and specifically on American tariffs.'
But after saying he would give his relationship with fellow world leaders 10 out of 10, Mr Trump hit out at his northern neighbour.
He tweeted that he would not now endorse the communique due to 'false statements' from the Canadian PM.
He wrote: 'Based on Justin's false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!'
He added: 'PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, 'US Tariffs were kind of insulting' and he 'will not be pushed around.' Very dishonest & weak. Our Tariffs are in response to his of 270 per cent on dairy!'
Posted by ASC at 7:24 AM