Friday, March 02, 2018

Latin America Reacts to Trump's Trade War

Donald Trump announced a trade war on steel. Yes, he literally did that this morning. No joke. Trade wars are ugly and everyone loses. Brazil has already announced it is considering retaliation.

Brazil's Industry Ministry on Thursday expressed "enormous concern" about the proposed U.S. tariffs and underscored that Brazil may take "multilateral or bilateral" action to protect its interests. 
The ministry said its steel industry was not a threat to the United States, noting that 80 percent of its steel exports are semi-finished products that serve as an important input for the American steel industry. The statement also noted that Brazil is the biggest importer of metallurgical coal from the United States.
Mexico has done the same.

Mexico expressly asked Washington to exclude it from any steel tariffs and will have “no option” but to retaliate with tariffs of its own if the US does not, a source close to the Mexican position said after Donald Trump announced plans to levy a 25 per cent tariff on steel imports.

It will also hurt Argentina, which is responding with cautious alarm.

En la Argentina, la noticia fue recibida con cautela. El gobierno de Mauricio Macri optó por eludir cualquier pronunciamiento oficial. La Cámara Argentina del Acero (CAA), que agrupa a las principales empresas siderúrgicas, manifestó "su preocupación" a través de un comunicado, y destacó que "aún no se conoce el alcance preciso de la medida en términos de productos y países afectados".

It is difficult to overstate what a bad idea this is. These three countries are all U.S. allies in Latin America and aside from hurting all the economies involved, it is a statement that the United States wishes not to be a regional leader. The economic hurt will ripple out.

Update (3/5/18): Paul Ryan says he is opposed:

“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” a spokeswoman for Mr. Ryan said in a statement. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”

Since he has been right in line with Trump, this is an important dissident voice. We'll see whether this constitutes the shooting down of a trial balloon.


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