WASHINGTON (Reuters) – U.S. President Donald Trump struck a defiant tone on Friday, saying trade wars were good and easy to win, after his plan to put tariffs on imports of steel and aluminum triggered global criticism and a slide in stock markets.
The European Union raised the possibility of taking countermeasures, France said the duties would be unacceptable and China urged Trump to show restraint. Canada, the biggest supplier of steel and aluminum to the United States, said it would retaliate if hit by U.S. tariffs.
U.S. stock indexes recouped some losses on Friday, but were on track to end the week in the red as investors fretted over a possible global trade war. World equity markets slid further and the U.S. dollar dropped to its lowest point in more than two years against the yen.
Trump said on Thursday that a plan for tariffs of 25 percent on steel imports and 10 percent on aluminum products would be formally announced next week.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said on Twitter on Friday.
In a later social media post, Trump said his aim was to protect U.S. jobs in the face of cheaper foreign products.
“We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” he wrote.
Many economists say that instead of increasing employment, price increases for consumers of steel and aluminum such as the auto and oil industries will destroy more U.S. jobs than they create.
Major U.S. trade partners are likely to retaliate against any new duties imposed by Washington.
Europe has drawn up a list of U.S. products on which to apply tariffs if Trump follows through on his plan.
“We will put tariffs on Harley-Davidson, on bourbon and on blue jeans – Levis,” European Commission President Jean-Claude Juncker told German television.
Officials have not said whether the tariffs would include imports from Canada and Mexico, Washington’s partners in the North American Free Trade Agreement (NAFTA), which is being reworked.
Canadian Prime Minister Justin Trudeau said any U.S. tariffs on steel and aluminum imports would be“absolutely unacceptable” and vowed to continue to engage with U.S. officials on the issue.
The International Monetary Fund also expressed concern about the proposed tariffs and said they likely would damage the U.S. economy as well as the economies of other nations.
Trump’s announcement came after what one person with direct knowledge of the discussions described as a night of“chaos” in the White House due to frequent switching of positions in the administration.
While Trump often lays out stark policy positions which he later rolls back as part of a negotiating tactic, White House spokeswoman Sarah Sanders said the levels of the planned tariffs were not expected to change.
Capital Alpha Partners, a policy research group in Washington, said a quick reversal by Trump was highly unlikely.
“We also don’t see a chance for fine tuning, exceptions, carve outs, or a country-by-country policy” in the short term, the group said in a research note.“We would be hopeful that the policy could be modified in time.”
The United States is the world’s biggest steel importer, buying 35.6 million tonnes, in 2017 and Canada is the leading supplier.
Peter Navarro, a White House adviser with largely protectionist views on trade, brushed off the drop in U.S. stock prices and the negative effects of tariffs on U.S. industry.
“I think the smart money right now is buying this market,” he told Fox News.
He said a 10 percent tariff on aluminum would add one cent to the cost of a can of beer, $45 to a car and $20,000 to a Boeing 727 Dreamliner.“Big price effects? Negligible price effects,” he said.
But home appliance maker Electrolux said it was delaying a $250 million expansion of its plant in Tennessee as it was worried U.S. steel prices would rise and make manufacturing there less competitive.
The EU, which sees itself as a global counterweight to a protectionist-leaning Trump, made no mention of retaliation but spoke of countermeasures that conform with World Trade Organization (WTO) rules.
Safeguard measures, last deployed by Europe in 2002 after then-U.S. President George W. Bush imposed steel import duties, would be designed to guard against steel and aluminum being diverted to Europe from elsewhere if U.S. tariffs come in.
But to conform with WTO rules such measures would have to apply to imports from all countries and could also hit producers including China, India, Russia, South Korea and Turkey.
Steel has become an important focus for Trump, who said he would restore the U.S. industry and punish what he sees as unfair trade practices, particularly by China.
Republican U.S. Senator Ben Sasse, who has been critical of Trump, said there were only losers in trade wars.
“Kooky 18th century protectionism will jack up prices on American families – and will prompt retaliation,” he said in a tweet.“Make no mistake, if the president goes through with this it will kill American jobs.”
Although China accounts for only 2 percent of U.S. steel imports, its massive industry expansion has helped produce a global steel glut that has driven down prices.
“China urges the United States to show restraint in using protective trade measures, respect multilateral trade rules, and make a positive contribution to international trade order,” Chinese Foreign Ministry spokeswoman Hua Chunying said.
Additional reporting by Tom Westbrook in Sydney, Tom Daly in Beijing, Philip Blenkinsop and Robert-Jan Bartunek in Brussels, Doina Chiacu, Eric Walsh and Makini Brice in Washington, and Gertrude Chavez-Dreyfuss in New York; Writing by David Clarke and Alistair Bell; Editing by Timothy Heritage and Paul Simao