Wall Street slips as USA tariffs spark trade war fears

Sean Reid
May 31, 2018

The European Union said it would impose tariffs against USA imports in retaliation for new American duties.

"This is $16.6 billion of retaliation", Freeland said. But Canada and Mexico were reportedly stunned by the move. "This is a very strong Canadian action in response to a very bad USA decision". Minutes before, prime minister had declared the USA measures "completely unacceptable". Trump has reportedly previously expressed to Trudeau his concern that Chinese steel was being laundered through Canada, a belief the Prime Minister has challenged.

The tariffs - 25 percent on steel and 10 percent on aluminum - will take effect at midnight Thursday, marking a major escalation of the trade war between the US and its top trading partners.

Conservative foreign affairs critic Erin O'Toole also shut down the national security argument, but said Trudeau should have done more to communicate this with his American counterparts. "We will defend the UK's interests robustly".

The S&P Composite 1500 Steel index.SPCOMSTEEL rose 0.3 percent, led by gains in AK Steel (AKS.N) and US Steel (X.N) although it pared early gains after Mexico's retaliation.

The EU has threatened to impose retaliatory tariffs on U.S. cranberries, peanut butter, whisky, denim and other popular goods if the USA makes good on its tariff threat.

However, shares of US seel and aluminium producers rose, with US Steel Corp and AK Steel up around 3.5 per cent, Nucor up around 1 per cent, and Century Aluminum rising 3.1 per cent.

The tariffs, which take effect from midnight on Friday, will end a two-month exemption for the key United States allies.

"But this is another negotiation tactic on the USA side and they want to use tariffs as a bargaining tool for other negotiations".

The problems of steel dumping will not be solved by unfair tariffs, and steelworkers in the United Kingdom and U.S. must not fall into the trap of believing rhetoric from the likes of Donald Trump. "He doesn't seem to get that his bluster and his bullying are costing people real jobs - in his own country, in Canada and in Ontario", Wynne said.

"It doesn't feel particularly constructive to me and I have to believe that the end game is not to create market instability, which is precisely what something like this does", she told AFP.

"Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States", Canadian Foreign Minister Chrystia Freeland said before the tariffs were announced.

Commerce Secretary Wilbur Ross said there will be a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum.

"As to Canada, Mexico, you will recall that the reason for the deferral had been pending the outcome of the NAFTA talks", he said. But now, "there is no longer a precise date when they may be concluded", Ross added, and that talks "are taking longer than we had hoped".

Despite retaliatory threats from allies, however, Ross insisted that reaching deals with Canada, Mexico and European partners should not be put on hold just because the U.S.is moving forward with implementing the stiff tariffs.

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