President Donald Trump set the stage for a trade war after slapping tariffs on steel and aluminum imports, daring other countries to retaliate and leading the European Union to warn that it would target iconic American brands, Bloomberg informed.
Hours after Trump tweeted that “trade wars are good, and easy to win,” European Commission President Jean-Claude Juncker said the bloc is prepared to respond forcefully by targeting imports of Harley-Davidson Inc. motorbikes, Levi Strauss & Co. jeans and bourbon whiskey from the U.S.
Juncker’s threat heightened the prospects of a global free-for-all, as the World Trade Organization said the potential of escalating tensions “is real” and the International Monetary Fund warned the restrictions would likely damage the U.S. and global economy.
Trump is facing anger from manufacturers and trade partners in Asia and Europe after announcing tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time.” He is expected to sign the formal order next week. Commerce Secretary Wilbur Ross said on Friday the president has chosen to impose the tariffs on all countries and products, dimming the hopes for nations such as Australia still pressing for an exemption.
Trump in a tweet Friday morning warned of more trade actions ahead, casting them as reciprocal taxes, a term he has used for imposing levies on imports from countries that charge higher duties on U.S. goods than the U.S. currently charges.
“We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!” Trump said in the tweet.
The aggressive stance stoked fears of trade retaliation and roiled investors. After the decision on tariffs initially depressed global markets, U.S. stocks pared losses of more than 1 percent Friday, while Treasuries slumped with the dollar as the wave of selling sparked by the threat of a trade war eased.