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Forget China, E.U. Threatens U.S. With Trade War – Targeting Harley-Davidson & Jack Daniels



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Feb 21 2018
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Donald Trump is learning the hard way that as the POTUS, he isn’t actually the most powerful man on planet Earth. That title, arguably, could easily belong to Vladimir Putin or Xi Jinping, or even the notorious Kim Jong-un. As the Commander-in-Chief, his commands to launch nuclear strikes on North Korea could still be rejected by U.S. generals.

 

Trump also learns that as the world’s biggest economic power, the United States can’t do as it wishes to “Make America Great Again (MAGA).”  During his presidential campaign, he often bragged how easily China could be brought to its knees. He had promised his supporters that China would be punished for “unfair trade”, “currency manipulation”, “IP thievery” and whatnot.

 

On Valentine Day, he said he was considering a range of options to address steel and aluminium imports that he said were unfairly hurting U.S. producers – including tariffs and quotas. Obviously, China is the target. And it appears that the tough Trump administration is about to show what the powerful U.S. is capable of.

US-China Trade War - President Xi Jinping and President Donald Trump

The Commerce Department has recommended imposing heavy tariffs or quotas on foreign producers of steel and aluminium in the interest of national security. Somehow, the U.S. saw it fit mixing business with defence, whenever it suits them. It’s easy to self-declare that the U.S. national security is under threat from foreign exporters. But slapping a global tariff isn’t as easy as a walk in the park.

 

The U.S. has recommended a global tariff of 24% on all steel imports. Turns out, China isn’t the only country which has been dumping steel on American soil. Brazil is actually the country exporting cheapest steel to the U.S. So, America, a supposedly free and fair nation, is toying with an idea of selectively targeting “only some countries” to be punished severely.

 

As many as 12 countries – Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey and Vietnam – have been identified as the so-called culprits so that they could be slapped with new tariffs of 53% or higher. Another option is to impose a quota on steel imports, restricting up to 63% of what they had sold to America in 2017.

China Steel Manufacturing

But those countries considered not U.S.-allies aren’t really the troublemakers. Despite Trump’s constant bashing and bitching about the Chinese, in truth, Canada – U.S.’ neighbour and strongest ally in the region – is the biggest international exporter of both steel and aluminium to the United States. It would scream hypocrisy and double-standard if Canada is excluded from the tariffs.

 

Trump’s war on steel and aluminium has already gotten another ally, E.U. – America’s strongest ally in Europe – prepares for the worst. Like China, which is ready to hurt U.S. farmers (Trump’s voters in Iowa, Indiana and Nebraska) with similar tariffs retaliation on made-in-America soybeans, the economic powerhouse European Union will not go down without a fight.

 

Brussels has pledged to fight fire with fire if Washington carries out its threat to introduce import barriers to steel and aluminium products from Europe. The first casualties would be U.S. iconic brands such as Harley-Davidson motorcycles and Jack Daniels whiskey. Apparently, like the Chinese, the Europeans have done their homework on their counter-tariffs war plan.

Harley-Davidson Motorcycle

Harley-Davidson was chosen because it is based in Wisconsin, home state of Republican Speaker Paul Ryan. Jack Daniels, meanwhile, is mainly produced in Tennessee and Kentucky, home of Donald Trump supporter Mitch McConnell, who is the Senate Majority Leader. The list of U.S. products to target was deliberately released by German – Frankfurter Allgemeine Zeitung.

 

Besides the U.S.-made whiskey, the E.U. plans to punish American orange juice and dairy products too. To send a strong – and serious – message that the E.U. wasn’t bluffing, European Commission president Jean Claude Juncker has claimed that Europe would respond to any US steel sanctions – within days, not months.

 

Out of the total U.S. steel imports last year which amounted to 26-million tonnes, 3.2-million were shipped from the E.U. The E.U. shipments were worth €2.8 billion (US$3.1 billion), a small amount but still, Brussels isn’t impressed about the collateral damage in a trade war which Trump is eager to fight against the Chinese. Unless the U.S. goes on a solo war on China, many U.S. allies are likely to be affected.

Jack Daniels Whiskey

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