With his latest tariff moves, President Donald Trump has initiated the opening salvos of a potential global trade war.
Up to now, his targets have been individual countries: China, Canada, and Mexico. On Monday, however, he announced 25% tariffs on all steel and aluminum imports. This is an escalation of the 2018 actions during his first administration when he carved out exceptions for some steel-producing countries and some Chinese goods.
This time, there are no exceptions.
Why We Wrote This
New U.S. tariffs create tension. The question is whether the next steps by the U.S. and its trading partners will involve more escalation – or conciliation to ease the conflict.
And on Sunday, the president said he would announce reciprocal (dollar-for-dollar) tariffs later this week on any nation that imposes duties on U.S. goods.
“That’s not a full-blown trade war yet,” says Kyle Handley, an economics professor and director of the Center for Commerce and Diplomacy at the University of California, San Diego. “It’s more of a trade cold war.”
It takes two or more to go to war. And so far, only Beijing has retaliated to the new tariffs the Trump administration imposed on China last week. A trade war will expand if and when others follow suit.
Tensions are rising
Tensions are clearly rising, and the question is whether the next steps by the U.S. and its trading partners will involve more escalation or concessions and bargaining to ease the conflict.
Reactions from abroad varied. In France, foreign minister Jean-Noël Barrot said the European Union would retaliate if America’s steel tariffs were enacted. “There is no hesitation when it comes to defending our interests,” he said in an interview on French television prior to Mr. Trump’s Monday announcement.
In Mexico, the No. 2 steel exporter to the U.S., President Claudia Sheinbaum took a wait-and-see attitude and promised to keep a cool head. She and Canadian Prime Minister Justin Trudeau both won one-month delays from U.S. tariffs earlier this month by stepping up efforts to secure their borders with the United States.
For China, already locked in a seven-year trade war with the U.S., Monday marked the first day of its $14 billion retaliation against specific U.S. imports. It imposed levies of 10% to 15% on imports of U.S. coal and other energy products as well as farm equipment and some cars. A Foreign Ministry spokesperson called for more dialogue and consultation, saying, “Protectionism leads nowhere.”