'Trade wars are easy to win', Trump tweets as Europe vows to retaliate

US 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 US goods than the US currently charges.

The aggressive stance stoked fears of trade retaliation and roiled investors. After the decision on tariffs initially depressed global markets, US stocks pared losses of more than 1 per cent on Friday, while US Treasuries slumped with the greenback as the wave of selling sparked by the threat of a trade war eased.

The planned tariffs, justified on the basis that cut-price metal imports hurt both American producers and national security, now raise the prospect of retaliatory curbs on US exports and higher prices for domestic users. While the practical impact may yet turn out to be limited, the political environment for global trade has just taken a turn for the worse.

Trump's actions could "could lead to other trading partners taking similar actions and could ultimately weaken the international trade conventions, like WTO rules, more generally," Goldman Sachs wrote in a research note on Friday.

The EU is prepared to retaliate against select US imports in a way that would maximiae political pressure on American leaders.

European Commission President Jean-Claude Juncker has threatened retaliatory measures on iconic US products.
Photo: AP

Harley-Davidson is based in House Speaker Paul Ryan's home state of Wisconsin, while bourbon whiskey hails from the state of Senate Majority Leader Mitch McConnell. San Francisco-based Levi Strauss is headquartered in House Minority Leader's Nancy Pelosi's district.

The official response in China, the world's largest steel producer and the main target of the tariffs, was muted. Foreign Ministry spokeswoman Hua Chunying said in Beijing on Friday that China urges the US to follow trade rules.

'Stupid' move

Industry insiders were less restrained. The US measures "overturn the international trade order," Wen Xianjun, vice chairman of the China Nonferrous Metals Industry Association, said in a statement. "Other countries, including China, will take relevant retaliatory measures."

Li Xinchuang, vice chairman of the China Iron and Steel Association, called the move "stupid."

China has already launched a probe into US imports of sorghum, and is studying whether to restrict shipments of US soybeans -- targets that could hurt Trump's support in some farming states.

While China accounts for just a fraction of US imports of the metals, it's accused of flooding the global market and dragging down prices.

US allies, seeing their industries threatened, responded with bafflement and dismay. Some also panned the idea that metal imports pose a threat to national security.

"Steel and aluminium imports from Japan, which is an ally, do not affect US national security at all," Japan's Trade Minister Hiroshige Seko told reporters in Tokyo. "I would like to convey that to the US when I have an opportunity."

The impact of the step hinges in part on which nations will be affected, said Alex Wolf, senior emerging markets economist at Aberdeen Standard Investments in Hong Kong, who previously worked at the US State Department.

"Until we see the final scope of the tariffs and the response from global trading partners, it's hard to say it's the start of a tit-for-tat trade war," Wolf said.