United States hits back with WTO challenge against Canada's retaliatory tariffs

Marsha Scott
July 17, 2018

The United States has imposed tariffs of 25 per cent on steel and 10 per cent on aluminum on the grounds that the imported metals pose a threat to US national security. "Instead of working with us to address a common problem, some of our trading partners have elected to respond with retaliatory tariffs created to punish American workers, farmers and companies", U.S. Trade Representative Robert Lighthizer said in an emailed statement.

China has repeatedly said it can weather a trade war better than the U.S. but the prospect of tariffs on as much as $500bn of Chinese goods has anxious investors and businesses. They come in response to retaliatory measures taken by these countries on American-made products earlier this year.

There is deep skepticism in the European Union about China's actual commitment to opening its market further, as well as concern that it seeks to divide the world's largest trading bloc with its economic influence in Eastern Europe. Washington fired back last week with a threat of 10 percent tariffs on an additional $200 billion list of goods.

After a strong start to the year, growth in China's exports has moderated recently, and is expected to face more pressure from the initial round of United States tariffs. "In fact, the USA and Ontario share numerous same goals". The Mexican government promised to continue to defend its national interest.

The trade war, now involving US$50 billion, will slow China's GDP growth by 0.2 percentage points with full consideration of the second and third rounds of the impact of reduced exports on related industries, according to a research team led by central bank economist Ma Jun.

Minister of Foreign Affairs Chrystia Freeland takes part in a NATO Engages Armchair Discussion at the NATO Summit in Brussels, Belgium on Wednesday, July 11, 2018.

Turkey's retaliatory tariffs, effective June 21, 2018, impose 4 to 70 per cent additional duties on United States dollars 1.8 billion in U.S. imports (based on 2017 trade values).

"If the USA and China do not resume talks in the next two months or so, the conflict will escalate further, with major economic implications for themselves and the global economy", Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong, wrote in a note after the data's release.

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China faced "extremely complicated and severe" domestic and external conditions in the first half of the year, the statistics authority said in a statement released with the data. Beijing has said it would retaliate, and on Monday the commerce ministry said it had added the $200bn tariff threat to existing WTO complaints it has lodged against Washington.

On this front, Ottawa feels it has more work to do.

They may need to deploy more of that firepower.

The unprecedented, cross-border tensions have presented big challenges for the Canada-U.S. trading relationship.

Forecasters say if threatened tariff hikes by both sides are fully carried out, that could cut China's 2019 growth by up to 0.3%.

The EU, while sharing Trump's concern over Chinese trade abuses if not his prescription of tariffs, has largely rebuffed efforts by China to pressure it into a strong stance against Trump.

There are widespread warnings that levies on the highly integrated Canada-U.S. auto sector would be far more damaging for the economy than the duties on steel and aluminum.

David MacNaughton, Canada's ambassador to the US, is scheduled to testify Thursday at the hearings in Washington.

Other reports by MaliBehiribAe

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