Trump’s proposed tariffs will lead to ‘deep recession’, say World Trade Organisation

Trump floated the idea of the stiff tariffs on aluminium and steel imports, and the administration has been backing their boss' decision publicly

Clark Mindock
New York
Monday 05 March 2018 18:02
Donald Trump unveils new tariffs on steel and aluminium imports to US

The director-general of the World Trade Organisation (WTO) is urging President Donald Trump not impose steep tariffs on aluminium and steel exports, saying that doing so could lead the world into a "deep recession".

"An eye for an eye will leave us all blind, and the world in deep recession," Director-General Roberto Azevedo told members of his organisation Monday. We "must make every effort to avoid the fall of the first dominoes."

The warning follows less than a week after Mr Trump shocked global markets by saying he wants to impose a 10 per cent tax on aluminium exports, and a 25 per cent tariff on steel imports. That announcement was met with swift threats from the international community, including key allies like the European Union and Canada, which pledged to retaliate if the American president makes good on his plan.

The Thursday announcement led to a drop in US stocks, with the Nasdaq, S&P 500, and Dow declining more than 1 per cent. The one market bright spot occurred with US steel, which climbed 6 per cent as investors eyed a potential drop in competition for American companies if Mr Trump made good on his plans.

But the President is also facing resistance from politicians in his own country, and his own party.

House Speaker Paul Ryan, the top ranking Republican in the legislative body, urged the President not to finalise his tariff plans, saying that doing so could have a drastic effect on international markets.

"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," Mr Ryan's spokesperson, Ashlee Strong, said. "The new tax reform law has boosted the economy and we certainly don't want to jeopardise those gains."

But Mr Trump has so far seemed uninterested in changing his plans to impose the tariffs, and that he is not concerned about a coming trade war.

"We're not backing down," Mr Trump said Monday at the White House. "I don't think we will have a trade war."

Over the weekend, Mr Trump responded to EU retaliation threats by saying he would impose a new tax on European cars.

Members of his administration also weighed in, saying that they did not think Mr Trump would waver.

"The President has announced that this will happen this week. I have no reason to think otherwise," Commerce Secretary Wilbur Ross told NBC on Sunday.

White House trade adviser Peter Navarro reinforced that notion, saying that rumours that Mr Trump might exempt American allies from the tariffs were wrong.

"There will be no country exclusions," Mr Navarro told CNN on Sunday.

Even so, the news that Mr Trump planned on tackling America's $800bn annual trade deficit through increased tariffs reportedly caused something of a riff within the White House, with aides disagreeing about the wisdom of the international tax.

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