Sweeping Trump tariffs shock global economy

FRANKFURT (AP):

US President Donald Trump’s sweeping new tariffs shocked governments and investors, provoking dismay, threats of retaliation and calls for negotiations to rescind the stiff new import taxes imposed on goods from countries around the world. Global stocks sagged.

China accused the US of “bullying” and the European said it was ready to retaliate, with French officials suggesting measures to hit US big tech companies.

Yet the calls for making a deal from the EU, the UK and Japan indicated a lack of appetite for escalating trade tensions with the world’s biggest economy and fear that slapping tariffs on US goods will only make things worse.

Trump said Wednesday that the import taxes, ranging from 10 per cent to 49 per cent, would do to US trading partners what they have long done to the US. He maintains they will draw factories and jobs back to the United States.

“Taxpayers have been ripped off for more than 50 years,” he said. “But it is not going to happen anymore.”

Trump imposed a 34 per cent levy on goods from China on top of an earlier 20 per cent tariff, as well as a 20 per cent tariff on the European Union, 24 per cent on Japan and 25 per cent on South Korea.

China’s Foreign Ministry spokesperson Guo Jiakun called for trade talks and said that “there are no winners in trade wars and tariff wars, and protectionism is not a way out ... It is clear to everyone that more and more countries are opposing the US’s unilateral bullying actions, such as imposing tariffs.”

China, which is a key exporter to the US of everything from kitchenware to clothing, has already announced a raft of retaliatory measures set to raise prices for US consumers.

French President Emmanuel Macron urged businesses to “suspend” investments in the US pending talks with the Trump administration, denouncing a “brutal and unfounded” decision.

“Because what would be the message of having major European players investing billions of euros in the American economy at a time when they’re hitting us?” Macron said before meeting with representatives of key businesses affected by US tariffs, including wines and spirits, food industry, cosmetics, health, metals and aircraft.

European Commission President Ursula von der Leyen denounced the tariffs as a “major blow to the world economy” but held off announcing new retaliatory measures and said the commission – which handles trade issues for the 27 member countries – was “always ready” to talk.

Analysts say there’s little to be gained from an all-out trade war, for the United States or other countries, since higher tariffs can lower growth and raise inflation. The tariffs are not paid by the countries they’re imposed on, but by the companies in the US that buy the goods to sell to Americans. They must decide whether to absorb the new taxes or pass them on to consumers in the form of higher prices.

“If Trump really imposes high tariffs, Europe will have to respond, but the paradox is that the EU would be better off doing nothing,” said Matteo Villa, a senior analyst at Italy’s Institute for International Political Studies.

“On the other hand, Trump seems to understand only the language of force, and this indicates the need for a strong and immediate response,” Villa said. “Probably the hope, in Brussels, is that the response will be strong enough to induce Trump to negotiate and, soon, to backtrack.”