The U.S. has also slapped additional tariffs on steel and aluminum products imported from the EU, Canada, and Mexico. It has invoked Section 232 of the Trade Expansion Act to impose import restrictions for security reasons.
The affected nations are poised to take retaliatory measures, so this may well trigger a trade war. The Trump administration should give consideration to the stability of the global economy and revoke the unilateral tariffs.
The U.S. already imposed import restrictions on products from Japan, China, and other countries in March. The EU, Canada, and Mexico were granted a grace period, but they were pressed to implement quotas on exports to the U.S. in exchange for being exempted from the additional tariffs. However, subsequent negotiations broke down, so they are now facing the same sanctions as Japan and China.
We must say that the import restrictions on steel and aluminum products are an abuse of Section 232. The true intent is to reduce trade deficits on the pretext of security. This may possibly constitute a violation of WTO rules.
The U.S. has also begun considering additional tariffs on cars, trucks, and auto parts citing the same law. While tariffs on steel and aluminum products already constitute a major problem, it is absolutely unacceptable for tariffs to also apply to autos.
Uncertainty permeates the global economy due to the rise in U.S. long-term interest rates and political instability in Europe. The U.S. should not start an unproductive trade war that will hinder economic recovery.
If the U.S.’s relations with its allies and partners deteriorate, this will also undermine its ability to deal with international issues such as North Korea’s denuclearization. The Trump administration should exercise restraint in its hard-line policies and correct the trade imbalance through negotiations.
Japan should also cooperate closer with the EU and other nations to strongly urge the Trump administration to change tack. It should take retaliatory measures such as filing a case with the WTO and demand the revocation of import restrictions.
If the U.S.’s reckless streak is not stopped right now, its unilateral sanctions may continue to escalate. This is no longer a problem that can be overlooked as long as one’s own country is exempted.
The G7 meeting of finance ministers and central bank governors will be held in Canada on June 2 and the G7 Summit is scheduled for June 8-9. Japan needs to take all possible measures to put a stop to the Trump administration’s protectionist trade policies. (Slightly abridged)