Trump's Looming Trade War Has Asian Allies Seeking Peace

By David Ljunggren and Lesley Wroughton

Numerous products the European Union has in its sights are specifically chosen to have maximum political effect. Bourbon whiskey hails from Senate Majority Leader Mitch McConnell's home state of Kentucky.

"We're not backing down", he told reporters on Monday.

China has been largely mum, urging caution, and both Canada and Mexico have stressed the targeted nature of any response. On Monday, it said: "Unilateral tariff impositions risk retaliation and destabilizing the global economy, in which case American brands, workers and consumers will ultimately suffer".

What is the European Union considering?

The European Union trade chiefs could apply 25 percent tariffs on around $3.5 billion worth of imports from the USA, in retaliation to any tariffs from Washington.

Investment bank Morgan Stanley calculates that taken together, steel, aluminum, washing machines and solar panels account for just 4.1 percent of USA imports.

But members of Trump's administration say they don't believe the President will back down, despite the worldwide and domestic pressure. Massive relocation of companies and jobs.

What does Trump want to do and why?

Cecilia Malmstrom, EU Commissioner for Trade, told the BBC that Levi jeans, bourbon whiskey and Harley Davidson motorbikes were on a draft list of USA goods to be hit with a 25% import tax.

On Thursday, he said steel imports would face a 25% tariff and aluminium 10%.


Then came Saturday's threat on EU-made cars. Taken together with actions on washing machines and solar panels, the proposed move accounts for just 4.1 percent of USA imports. "It will be very harmful to the United States economy... and very bad for the worldwide trading system".

The president said that North American neighbours Canada and Mexico would not get any relief from his plan to place the tariffs on the imports but suggested he might be willing to exempt the two longstanding allies if they agreed to better terms for the North American Free Trade Agreement.

Robert Lighthizer, Trump's top trade envoy, hinted Monday that the tariffs were an attempt to speed up the pace of NAFTA talks. Analysts at UBS said Europe would have a good chance of winning, but the group could take 18 months to reach a decision, says CNN Money.

Trump also said, after a weekend of tweets in which he threatened to hit German automakers with tariffs, that Mexico needed to do more to stem the flow illegal drugs to the United States, something not encompassed by the talks over the North American Free Trade Agreement (Nafta).

Brazil, Mexico and Japan, that have said they will consider retaliatory steps if the president presses ahead with his plan. Now Trump has launched a war not just on "unfair" trade practices but also on the very idea of an open, rules-based global system of trade.

A number of Republicans have questioned the wisdom of the tariff proposal and have been urging the president to reconsider.

"We are extremely anxious about the consequences of a trade war and are urging the White House to not advance with this plan", Ryan spokesperson AshLee Strong said.

Industry bodies such as the US Motor and Equipment Manufacturers Association have expressed deep concern.

Is there room for compromise?

The European Union intends to target 2.8 billion euros ($3.5 billion) of US goods ranging from T-shirts and whiskey to motorcycles and ladders should President Donald Trump go ahead with his plan to impose a 25 percent tariff on foreign steel. Canada has provincial elections later this year, and the USA midterms are in November.

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