U.S. challenges China, EU and others at WTO over steel tariffs

Saul Bowman
July 18, 2018

Besides the steel and aluminium tariffs on the EU, Russia and major USA trading partners, Trump earlier this month implemented tariffs on $34 billion worth of Chinese imports, drawing a tit-for-tat response from Beijing.

How much easing Beijing will resort to remains uncertain, economists said, with China's economic managers trying to steer a course between bolstering growth and reigniting a rise in debt that leaders have seen as a longer term threat.

"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".

The announcement, from the Ministry of Commerce, came less than a week after the U.S. Trade Representative proposed a second possible tariff hike following a measure targeting $34 billion of goods.

He added that China would continue to provide a good business environment for foreign firms including forbidding any forced transfer of intellectual property, something which European and U.S. companies have accused the Chinese of doing.

Both sides agreed that faced with the current complicated global situation, especially the rise of unilateralism and protectionism, China and the European Union, as two major forces and economies of the world, have the joint responsibility to safeguard the rules-based worldwide order, advocate multilateralism, and support free trade so as to promote world peace, stability and development.

"It is a common duty of Europe and China, America and Russian Federation, not to destroy this order but to improve it; not to start trade wars which turned into hot conflicts so often in our history, but to bravely and responsibly reform the rules-based worldwide order", Tusk said.

During the 20th Summit between the European Union and China in Beijing, the two sides agreed to work to protect the world's multilateral economic order.

Exporters say American orders started to fall off as early as April as the war of words between Trump and Beijing intensified.

"There is still time to prevent conflict and chaos", said Mr Tusk.

Canada's retaliatory tariffs, effective July 1, impose 10 to 25 per cent duties on Dollars 12.7 billion in United States imports (based on 2017 trade values).

"World trade protectionism continues to heat up, posing a major challenge to the world economic recovery and adding challenges and uncertainties for us", Mao said.

In June, China's central bank said it would reduce the reserve requirement ratio for most banks in an effort to free up funding for small firms.

That means headwinds not just for China's economy, but for the world's too. While Beijing is already shifting gears to support growth - and fend off any ill-effects from the escalating trade fight with the USA - some economists expect the slowdown to worsen in coming months before the lingering effects of the credit-tightening dissipate.

"Global supply chains, shipping companies, foreign investment hurdles from the United States government at the same time as China pledges to welcome more foreign investment will change global business flows".

China is the No. 1 trading partner for its Asian neighbours and buys oil, iron ore and other raw materials from Australia, Brazil and elsewhere. It could deploy measures against USA multinational companies operating in China such as consumer boycotts.

Chinese Premier Li Keqiang met European leaders Monday, after which they released a joint statement calling for more openness in world trade. Many feel that it may already be too late to do anything about this.

European Council President Donald Tusk, Commission Vice-President Jyrki Katainen, Trade Commissioner Cecilia Malmström, and Transport Commissioner Violeta Bulc also represented the EU at the Summit.

But Jim McCafferty, head of equity research, Asia ex-Japan at Nomura, said China's underlying economic data "appears to be quite robust". "It knows how to open up".

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