By: Dr. Juan Carlos Botello and Dr. Werner G.C. Voigt
(Independent External Contributor)
Donald Trump signed an Executive Order on March 8th 2018 invoking a seldom-used law, the 1962 Expansion of Trade Act, which in Article 232 gives the President unilateral authority to impose punitive, protective tariffs on any imports that might negatively impact the national security of the United States. He ordered the application of a global 25% tariff on steel imports and a 10% tariff on aluminum imports to go into effect one minute after midnight on Friday, March 23, 2018 ! However, in his usual diabolical manner he is also trying to leverage the tariffs to achieve other geo-strategic goals: He as threatened to withdraw temporary exclusions for Mexico and Canada if they do not accept a renegotiated version of the NAFTA Treaty that surrenders to U.S. demands on all counts – while, at the same time, inviting any country with which the U.S. has a “security relationship” to beg for an exclusion. But there are strings attached: 1) each applicant must reduce steel and aluminum exports to the U.S. to January 2017 levels, 2) must actively attack Chinas various trade-distorting policies which have caused a 375 billion Dollar annual trade deficit for the U.S.A., 3) must actively support Trump’s steel and aluminum tariffs at the G 20 Summit now taking place in Argentina, 3) must join the U.S. in launching legal action against Chinese trade practices before the World Trade Organization and, finally, 4) must buy more U.S. produced weapons systems to enhance global security. Well, except for Australia – which is begging on its knees – no other country in the world has acceded to Trump’s demands and it now appears almost inevitable that the world is sliding toward a global trade war. Trump’s first direct target is China whose information technology exports, its consumer electronics and telecoms are in his crosshairs and will face a collective immediate tariff of 60 billion Dollars. The government in Beijing has responded with a five-fold threat to cut off 1) U.S. soybean imports (the U.S. exports 60% of its harvest to China), 2) to cut off U.S. beef, 3) to switch from Boeing aircraft to the European Airbus – representing an annual loss of 37 billion Dollars to Boeing alone 4) to cut off U.S. sorghum exports which is used as animal feed in China and, finally, 5) to dump part of its 1.3 trillion Dollar holdings of U.S. Treasury Bonds onto the international financial markets – causing a violent drop in the attractiveness of these financial instruments.
The European Union has also aggressively pushed back and just published an impressive list of U.S. export products it intends to subject to painful retaliatory tariffs: Yellow Corn, Beans, Rice, Peanut Butter, Berries, Orange Juice, Bourbon Whiskey, Cigars and Cigarettes, Tobacco, Make-up Products, T-Shirts, Men’s and Women’s Pants, Shoes, Steel of all types, Metal Doors and Metal Structures, Kitchen Products, Heaters, Motorcycles, Maritime Vessels of all kinds, Paper and Cellulose, Ceramics and Glass, Jewellery, Batteries, Cargo Trucks and finally: Lamps and Light fixtures… The EU bloc plans to impose tariffs of up to 25% on those products with an impact of $ 2.4 billion us dollars up to $ 6.4 billion of euros. The European Commission last Friday asked the industry for a list of US products to which they will apply import tariffs. In the context of a possible trade war, the Commission requested a response to the European Union by March 26. Apparently we are facing an impending trade war unless President Trump desists from his radical decision and realizes that countries no longer feel threatened so easily.
