Trump Started a Global Trade War Today: Canada, Mexico Responded, So Will Europe

Mike Mish Shedlock

Trump has been itching for a global trade war ever since he took office. He just confirmed one.

The U.S. will impose tariffs on steel and aluminum imports from Canada, Mexico and the European Union starting on Friday. Trump's ill-advised Tariffs Provoked Anger and Retaliation from US Allies.

The tariffs make good on President Donald Trump’s threats and show the administration is maximizing pressure to win concessions from allies, while simultaneously negotiating through a high-stakes trade conflict with China, seen as an economic competitor.

Besides steel and aluminum, the U.S. administration is studying whether tariffs should be imposed on imported cars and auto parts under the same law that gives Mr. Trump wide authority to erect trade barriers under the banner of national security.

“This is dumb,” said Sen. Ben Sasse, a Nebraska Republican. “Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents.”

Sen. Orrin Hatch, chairman of the Senate Finance Committee, said in a statement: “Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers. I will continue to push the administration to change course.”

Trump Wants to Halt German Luxury Car Imports

Via translation from WirtschaftsWoche, Trump wants to block Daimler from the US market.

US President Donald Trump has announced to French President Emmanuel Macron to exclude German premium car makers from the US market. On Macron's visit to Washington in April, Trump said he would maintain his trade policy until no Mercedes models rolled on Fifth Avenue in New York. This reports the WirtschaftsWoche, citing several diplomats from Europe and the United States.

Trump's grudge against the German automaker - and especially against Mercedes models in New York - is not new. In January 2017, prior to his inauguration, he said in an interview, "When you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house." But that's not reciprocity. "How many Chevrolets do you see in Germany? Not too many, maybe none at all, you do not see anything over there, it's a one-way street, "said the real estate billionaire.

What Trump forgets: Popular SUV models such as the BMW X5 or Mercedes GLE are built in the US, not Germany.

Retaliation Starts

  • Mexico’s Economy Ministry quickly said it would target several U.S. goods in response, including some steel and pipe products, lamps, berries, grapes, apples, cold cuts, pork chops and various cheese products “up to an amount comparable to the level of damage” linked to the U.S. tariffs.
  • Canada, in anticipation of the tariffs, had pledged to impose retaliatory measures. Prime Minister Justin Trudeau Thursday called the levies “totally unacceptable,” adding it was “inconceivable” that they were related to national security.
  • The EU has said it is also planning to hit back with its own levies after preparing a list of U.S. exports worth €6.4 billion ($7.5 billion) that could be slapped with levies, up to €2.8 billion of which could go into effect staring June 20. The EU said it would also launch a case against U.S. measures at the World Trade Organization on Friday.

Justin Trudeau Calls Trump's Action "Totally Unacceptable"

CTV News reports Trudeau calls Trump tariffs 'totally unacceptable,' outlines countermeasures.

Justin Trudeau Tweets

French Buddies

French president Emmanuel Macron and Trump have become buddies.

Why not? France exports few cars to the US.

A translation from Spiegel Online underscores the key idea: Trump's Policies Hit Nearly 5,000 German Companies.

Trump's Real Target

Purposeful or not Trump is driving a wedge between various countries in Europe.

So, I ask again, What's Trump's Real Trade Target: China or Europe?

Also consider Trump Hardball: Europe Pressured to Cancel Russia Pipeline to Avoid Trade War

Amazingly Prophetic Interview

In case you missed it, please consider Trump's Amazingly Prophetic 1990 Playboy Interview.

Regardless, of Trump's primary target, if any, Trump wanted a global trade war. And he just started one.

Only fools cheer.

Mike "Mish" Shedlock

Comments (28)
2banana
2banana

Mish. We have been in a trade war for the last 30 years. We have lost every battle, the American middle class and our manufacturing base. About time we did something different than "Oh well, globalism is what it is....so sorry..."

No. 1-28
Stuki
Stuki

…..So, since we have ben in a trade war for 30 years, in the process losing the middle class and manufacturing base; let’s ramp up the trade war…….

thimk
thimk

war on drugs, war on poverty, war on terrorism/communism , star wars, storage wars, and now trade wars , I am getting battle fatigue.

xil
xil

my first car was a POS chevy in mid 80s. my second was an old four door benz. reminds me of the old chevy vs ford saying except in my case, i'd rather push a benz than drive a chevy (and that benz was HEAVY and VERY well engineered)

Cocoa
Cocoa

Complex interdependence dictates that we can't afford to go to war because we need each other's crap. This would be fine except globalism is designed not to prevent conflict but to enrich a small subset of players. The little guy in France and US gets hurt. Our internal political system prevents transition to new economy - there is no help from government. That's why the flyover states voted for him. On that note I thought Mercedes built cars in the US, down South...

Cocoa
Cocoa

Not being able to buy a Mercedes is a first world problem. Who the fuck cares. Starting trade wars over agriculture in Mexico is a bigger deal. That means basics are going to be more expensive. Toyota was smart and they build cars and trucks in US

Blacklisted
Blacklisted

What are we supposed to do with countries that impose higher tariffs on our goods than we do on there’s? While many of these countries are run by Utopian bureaucrats, they obviously didn’t go to your Utopian School of Trade. Trust but verify is only as good as the consequences for violations. We should trade freely with countries with free trade policies, and be willing to take the gloves off with those countries that impose tariffs on our goods. Besides, Merkel and Germany have it coming to them for imposing austerity on the PIIGS, unilaterally opening the immigrant flood gates, all the while getting the biggest benefit from the euro, which has been much lower than the Deutsche Mark. Germany is also the primary reason that debts were not consolidated across the eurozone when the euro was created, enabling a true competitor to US Treasuries, which is now coming back to haunt the euro. Now that I think about it, Trump should let it go, so he doesn’t get blamed for the coming implosion of the EU/euro that will occur regardless.

Cocoa
Cocoa

Building your cars here is true globalism. Then people who build for you real the benefits and can buy the product. Saves costs too. Please see Toyota

abend237-04
abend237-04

I remember after the Cuban missile crisis, it came out that Nikita Khrushchev's son was among those extremely critical of Khrushchev for ordering Russian ships approaching the U.S. Navy blockade to turn back. Khrushchev finally turned on his son and snapped, "It's easy to start the shooting; nobody can stop it." We'll now witness whether diplomats are any more adept at stopping trade wars.

2banana
2banana

@ themonosynaptic "Once Trump realises that he isn't going to get everybody to love him because he is a "trade war President", he'll go for it and become a "shooting war President" - watch out Grenada, been too long since we've invaded you"

You mean Trump should act more like Barak "Peace Prize I am pretty good at killing people" obama who then went on to invade Libya, Syria, went back to Iraq and increased troops in Afghanistan to a record 110,000?

Tony_CA
Tony_CA

bring it on.

Tengen
Tengen

China and these other countries didn't make the rules, they just played the game. It was elite Americans who rigged this system for the American middle class to suffer. Americans knowingly hired illegal labor for low skill jobs for decades. Americans gave conferences to teach each other how to "fail" to find qualified American applicants for positions, ensuring the need for more H1Bs.

Remember when Bill Gates used to whine ad nauseum that American workers aren't interested in technology? If you truly care about what happened average Americans, your enemies are nearly all domestic. If you could label them, the Fed, the banksters, corrupt corporate execs, and bootlicking politicians would all have "Made in USA" stamped on them.

Realist
Realist

The problem is that Trump thinks it’s easy to “win” a trade war. As a result, he is alienating the US from its’ allies and friends, in addition to its’ enemies. He insists on winning by making others lose. No country would ever sign a trade agreement where they willingly lose in order to let the other side win. I agree with Mish, that there is a chance this ends badly for everyone. In fact, the US could end up isolating itself, while the rest of the world continues to establish more free trade agreements among themselves.

Quatloo
Quatloo

All this will do is raise the cost of living in the U.S. This policy is so misguided. Would be great if we had a President who would focus instead on controlling government spending, but he is obviously not interested in that.

shamrock
shamrock

What problem is he trying to solve? Unemployment is 3.9% and heading lower. There is no one here to do a job if it "comes back" and he sure is hell isn't letting any stinking foreigners come here to do it.

themonosynaptic
themonosynaptic

"You mean Trump should act more like Barak..."

Yup.

Tengen
Tengen

At this point they may as well announce we've hit full employment. Anybody not currently employed is considered outside the labor force. Problem solved.

Officially, as of January 2018 the US labor force was 161M people, less than half our total population. Nothing shady about that!

Tengen
Tengen

Oh, we're keeping the sarcasm going? In that case, yes, that's the problem. We shouldn't have planned our population so that 16-70 year olds represent a clear minority of the overall population. Who's the genius who thought that was a good idea?

Tengen
Tengen

I still remember the heady days of 2016 when Trump called the BLS stats outright lies, saying the real unemployment rate could be as high as 42%.

3.9%, 42%, tomato tomahto. What's a few percentage points among friends? We're nearing full employment, just like the USSR!

Snow_Dog
Snow_Dog

WTF? 1.) Drain The Swamp 2.) Build the Wall 3.) Lock her up 4.) Repeal and replace

Has turned into : 1.) Tariffs for all 2.) Summit with Koreans 3.) Embassy in Jerusalem 4.) Mueller clownshow

We did get a tax cut, but a strong Chief-of-Staff is needed to keep agenda on point. Furthermore, what has Jeff Sessions done besides cost them a Senate seat?

Tengen
Tengen

Don't you dare question the integrity of Jeff Sessions. Somewhere in this great land of ours is a group of teenagers with a baggie of marijuana, and by gum, ol' Jeffy's gonna find them! What could possibly be more important than that?

TheLege
TheLege

Where's Latkes? He's normally cheering for tariffs.

TheLege
TheLege

You said: "Germany is also the primary reason that debts were not consolidated across the eurozone when the euro was created .." Can I have some of what you're smoking? Under what scenario would a creditor nation like Germany agree (with the backing of its citizens) to effectively take on the debts of a host of dysfunctional debtor nations? The Euro is doomed because this will never happen -- even if the loon pond in Brussels would like nothing more. Europe is doomed. It is finished. It was obvious from the outset.


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