World trade: how far will American protectionism go?

Invoking section 232 of the « Trade Expansion Act » of 1962, which allows the U.S. government to restrict imports of goods deemed sensitive and therefore detrimental to national security, Donald Trump decided to raising tariff barriers 25% for steel and 10% for aluminium.

Faced with indignation, it had temporarily exempted the European Union, Mexico, Canada, Australia, Argentina, Brazil and South Korea. until 30 May 2018.

Since then, some exempt countries have negotiated agreements in principle: South Korea accepted the introduction of quotas, whileArgentina,Australia and Brazil announced that they want to take steps to limit their exports to the United States...

For the EU, Canada and Mexico, on the other hand, the US Secretary for Trade confirmed theeffective application of the additional customs duties on 1 June 2018.

The Brussels response has not been delayed since the European Commission has activated the lever of countermeasures aimed at implementing the Additional duties on a selection of products « made in USA » emblematic products: steel, bourbon, peanut butter, motorcycles, jeans,... All for an estimated value of EUR 2.8 billion.

In the event of failure, the use of so-called « Backup » is envisaged to put pressure on Washington.

Background : the safeguard measure is a WTO-approved regulatory mechanism in the event of a massive and sudden influx of imports likely to seriously disrupt or threaten the importing country's industry.

In the rest of the world, each country goes from its announcement to make good progress:

• The Canada wants to impose taxes from 1 July on US imports of steel and aluminium, as well as on a series of consumer products (food products, household appliances, etc.).
• To Mexico, same strategy: the government wants to put intaxes on several U.S. agricultural products, as well as steel or bourbon.
• The Turkey, 8th country producing steel, goes even further by announcing that it wants to tax American imports of coal, tobacco, whiskey but also automobiles, cosmetics, machine tools, and petrochemical equipment and products... as early as June 21st!
• The Japan, has not yet given a precise list but is also considering surtaxing certain targeted products.

As far as WTO complaints are concerned, the case is very serious: those of the EU, Canada and Mexico joined those of China and Russia which opened the ban in April.