We are on the verge of a trade war with the EU, Canada and Mexico, as tit-for-tat tariffs start

The US and its traditional allies are on the verge of a full-scale trade war after the European and canadian leaders reacted quickly and angrily to the decision of Donald trump to impose duties on steel and aluminium producers.

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European Commission President Jean-Claude Juncker, has promised immediate retaliation after the U.S. Commerce Secretary, Wilbur Ross, said the EU will face a 25% duty on steel and 10% duty on aluminium from midnight on Thursday.

Europe, along with Canada and Mexico, was granted a temporary reprieve from the tariffs after they were released Donald trump two months ago.

However, Ross sent a shiver through global financial markets when he said that insufficient progress had been made in negotiations with the three traditional allies of the United States to reduce America’s trade deficits and that the refusal was cancelled.

Wall Street fell sharply, as the Industrial Dow Jones closed down more than 250 points, as investors sold off shares of manufacturers and corporations that have global reach. Shares in Europe also fell.

Moving from Washington, which comes in the moment when trump is threatening protectionist measures against China provoked an immediate and angry response from Canada, Brussels and some European capitals.

Juncker urged the U.S. move “groundless” and stated that the EU has no choice but to hit back with tariffs on American goods and business in the world trade organization in Geneva.

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“We will defend the interests of the Union, in full compliance with international trade law”, – he added. Brussels has already announced that the target Levi’s jeans, Harley-Davidson motorcycles and Bourbon whiskey.

The UK, which hopes to agree on a deal to liberalize trade with the United States after the British exit from the EU, expressed concern with the statement of Ross.

Liam Fox, Secretary of international trade, said that the Kingdom does not exclude countermeasures or taking a Washington in the WTO, which allows a global trade disputes.

Speaking on Sky News, he attacked the tariff as “absurd” and urged US to think again. “It would be very unfortunate if we found ourselves in the response of trade disputes with our closest allies.”

A spokesman for Number 10 said the government was “deeply disappointed” the US decided to apply the tariffs and that Teresa may would raise the issue with trump at next week’s meeting of G7 industrial countries in Canada.

“The UK and other European Union countries are close allies of the U.S. and must be permanently and completely exempt from U.S. measures against steel and aluminium”.

The President of France, Emmanuel macron, called the us tariffs are illegal and incorrect, as the Prime Minister of Canada, Justin Trudeau, immediately as a response to the establishment of tariffs to 25% on the import into the United States in the amount of 16.6 billion canadian dollars (£9.6 billion), which was the total value of canadian exports of steel in the United States last year. The tariffs will cover steel and aluminum, as well as orange juice, whiskey and other food products.

With the White house using the legislation in the field of national security to impose tariffs, Trudeau called measures are “a challenge” to Canadians who fought on their American comrades in arms. “The fact that Canada can be regarded as a threat to U.S. national security is unthinkable.”

The Minister of foreign Affairs of Canada Chrystia Freeland, went further, calling it the country’s $16.6 billion in retaliatory tariffs, “the most powerful professional actions have been adopted in Canada in the postwar era. This is a very strong response. This is a proportionate response, it is mutual … it’s very strong canadian response to a very bad decision for us.”

Mexico also condemned the move, saying it “deeply regrets and condemns” the decision of the United States.

The economy Ministry said that he would like to take similar measures for various goods, including sheet steel, lamp, pork legs and shoulders, sausages and prepared foods, apples, grapes, cranberries, cheeses, and other products, “in an amount comparable to the damage caused by the action of States”.

He added: “this measure will be in force as long as the US government supports imposed tariffs”.

Hopes remain that the consequences can be contained. Analysts at research firm Oxford Economics said the economic blow to Europe will be significantly below 0.1% of GDP, as steel and aluminum are just a small part of the total exports of the bloc in the world. However, they warned the tit-for-tat escalation, leading to tariffs on other goods, such as cars, will have serious consequences for world trade.

Last week, trump administration launched a national probe of security in respect of import of cars for reasons of national security, which could lead to duties on vehicles from Europe, Japan and South Korea should trade tensions continue to spiral out of control.

For the struggling UK steel industry, the news about the tariffs we proposed a fresh alarm. Director of LLC ” MC ” steel, Gareth Stace, said: “President trump already loaded the gun and today, we now know that the U.S. administration, unfortunately, shot and potentially damaging started a trade war.

“As President, trump announced his plans to introduce blanket tariffs on steel imports almost three months ago, in the UK steel sector was hoping for the best, but still feared the worst. With the expiration of the exemption from the EU confirmed its intention to take effect tomorrow [Friday, June 1], unfortunately, our pessimism was justified, and we are now seeing the damage not only to the UK steel sector, but also the U.S. economy.”

The representatives of the steel industry the United States also expressed disappointment. “Make no mistake: the restriction on the supply of raw materials in the United States and imposing tariffs on imports from our closest trading partners places the American producers directly in danger,” said Paul Nathanson coalition of U.S. manufacturers and users.

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KBR warned the EU against hasty step of Washington. Ben Digby, international Director of the employers ‘ organization, said, “the efforts of the President are not a concern for firms in the UK, for close trading partners and across supply chains”.

Trump announced in March its tariffs as a way of protecting American firms from cheap imports, but Digby said the problem was caused by a global oversupply of metals and the problem needed to be solved together with Brussels and Washington.

“There are no winners in a trade war that could damage the well-being on both sides of the Atlantic. These tariffs could lead to protectionist Domino effect, damaging firms, workers and consumers in the US, UK and many other trading partners. Now is not the time for any disproportionate escalation, and we urge the EU to take this into account when initiating his answer.”

But neither side showed any visible signs of willingness to ease tensions. Cecilia malmström, European Commissioner for trade, said that the reaction of Brussels would be proportionate and in accordance with WTO rules. Ross ignored the threat of retaliation by the EU, stating that it will have little impact on the US economy.

Manfred Weber, leader of the European people’s party, the largest group in the European Parliament and a key ally of German Chancellor Angela Merkel, warned that while considering the EU as the “enemy” would harm American consumers.

“Europe does not need a trade conflict. We believe in fair trade regime, from which all win,” he said.

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“We’ve tried everything to dialogue and mutual understanding prevail. If the President trump decides to treat Europe as an enemy, we will have no choice but to defend European industry, jobs in Europe, European interests.”

Ross blamed the lack of progress in negotiations with Mexico and Canada on amendments to the free trade Agreement North America (Nafta) on the U.S. decision to slap tariffs on two of its neighbors.

Mexico’s Deputy Minister of foreign trade, Juan Carlos Baker wrote on Twitter: “Mexico categorically rejects any unilateral protectionist measures that distort trade in North America.”

China also warned that he would meet retaliation his own.