The announcement of President Trump of large rates on American commercial partners has expanded the fracture between the United States and some of its closest allies reconfiguring the global economic order.
The plan of Mr. Trump, who revealed on Wednesday and is calling “mutual”, would impose a wave of rates on dozen countries. Among the main economies most affected were the European Union, which will face rates of 20 % pursuant to the plan and China, which will absorb further 34 percent in addition to existing withdrawals.
“The scope and size of the rates are substantial and confirm the worst fears of free trade supporters,” said Eswar Prasad, professor at the Dyson School of Cornell University. “Trump is unleashing a new era of protectionism that reverberates all over the world.”
Mexico and Canada, two of the largest commercial partners in the United States, would not be subject to any new rate in addition to the samples that the president had previously announced, on imported vehicles, parts of the vehicle, steel, aluminum and any other goods not exchanged according to the rules of the US-Messic-Canada agreement.
The new withdrawals include a basic rate of 10 % on all countries except Canada and Mexico, as well as additional rates based on the rates that other nations apply to US exports and to other barriers that the administration has considered unfair.
The Asian countries were some of the most affected. Rates on Japan and India will be more than 20 percent, with nations such as Vietnam, Cambogia, Bangladesh and Sri Lanka face even more steep rates.
Exiger, a data analysis company, calculated that the burden could fall heavier for Chinese exports, which would have to face $ 149 billion in additional rates, while Vietnamese assets would have faced $ 63 billion, Taiwanese products $ 37 billion and Japanese goods $ 36 billion in rates. The company has defined the announcement as a “monumental policy shift that will remove the supply, prices and geopolitical strategy”.
The assault on many frills left global partners.
The European allies have announced the intention to take revenge on a previous wave of steel and aluminum rates and have been clear that they could respond to the growing commercial conflict by creating barriers for services such as large technological companies. Others have adopted a more waiting approach.
Prime Minister Anthony Albanian of Australia said that the United States that impose rates of 10 % on the country had no “basic base in logic”. But Australia will not run to take revenge, he said, saying that the country will not “join a ride down that leads to higher prices and slower growth”.
In Mexico and Canada, there was a sense of implication relief in avoiding a new wave of rates. “This is good news for the country,” said Luis de la Calle, a better Mexican commercial economist. “It allows us to safeguard our access to US markets.”
But analysts have warned against too much optimism, since both countries are already facing a series of recently imposed samples. Trump said that the rates on Canada and Mexico aim to curb the flow of Fenestanil in the United States.
“He preserved a series of important elements of our relationship,” said Prime Minister Mark Carney of Canada, “but the Fenanil rates still remain in place”. Carney, who spoke briefly as she headed towards a cabinet meeting, added: “We will fight these rates with countermeasures”.
The guiding thread is that many American friends are increasingly playing against Washington, a posture that could change international relations and the global order for the years to come.
Many wonder what the final objectives could be.
Trump sometimes claimed that he wants to force companies including car manufacturers and drug producers to produce in the United States. He also said that the point is simply to correct injustice. And he said the rates will help to pay for tax cuts.
For American global partners, the aim is important. If the point is to make the trading system more fair, this would suggest an opening to the negotiation. Europe could play with any tariff on cars, for example, to try to press the Trump administration to take a less aggressive position.
If the point is to raise funds for the American coffers, this is a more difficult starting point for commercial partners. In this case, finding an agreement that reduces the expected rates would mean reducing any potential revenues.
Given the uncertainty, the American partners have tried to learn as much as possible on what is happening, while the measured responses are implementing.
Europe, for example, has taken a more aggressive position of many individual nations, announcing plans for retaliation rates on whiskey, motorcycles, agricultural goods and a wide range of other products in response to steel and aluminum withdrawals. But he has already delayed those measures until mid -April and politicians have not yet announced exactly how they will react to the last round of rates.
Instead, the officials clarified that they are willing to respond forcefully, including, perhaps, using a recently created tool that would allow them to position sanctions such as rates or restrictions on market access to American technological companies relatively.
The goal would be to get the lever. EU nations are trying to throw the weight of the consumers market of the block of 27 nations to force Washington to negotiate.
But the plans to reject were made more difficult because other geopolitical topics have become closely connected to the commercial conflict.
For Europe, military objectives and technological regulation have been captured in the dispute. The United States wants that the European Union supports the burden for their defense more, also starting the restrictions on large technological companies, including regulations intended to ensure that they are applying content standards.
The question is how quickly an answer will arrive. European leaders, for example, clarified that they want to digest the details of the last round of rates first.
“They don’t want to intensify: desire is to do business,” said Mujtaba Rahman, CEO of Europe at Eurasia Group, a political research company. But, he added, there is a risk that the situation intensifies and that Europe can come after American services in the coming weeks and months.
“You have to flex the economic muscles to be credible with this administration,” he observed.
Paulina Villegas Relationships contributed by Mexico City; Ian Austen by Windsor, Ontario; AND Victoria Kim From Canberra, Australia.