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Trump's thinking about a tariff could trigger 'global recession'

10 July 2017

But as Trump contemplates protectionism, Europe and Japan reached a landmark free trade agreement this week.

The divergent approaches have set up the G20 as a potential crossroads for the world's new economic order.

Ahead of the summit, the White House was close to making a decision, but top Trump administration advisers slowed the process down at the last minute, convincing Trump to meet with other world leaders at the G-20 before deciding how to proceed.

Trump thinks the United States has been unfairly disadvantaged by sweeping free-trade agreements like the North American Free Trade Agreement or the Trans-Pacific Partnership. "It also has to do with the national security of our country".

The Sept. 5 communique urged the OECD to help countries "enhance communication and cooperation", take "effective steps to address the challenges", and "encourage adjustment". Some Trump advisers contend the restrictions needed to protect the domestic steel industry from what they allege are trade practices by China, but worldwide allies, including Germany and Canada, have vocally opposed the new restrictions, arguing it will punish their nations' industries and raise the global price of steel.

An administration official, however, told Reuters last week that the report would be released after Trump spoke with leaders at the Group of 20 summit in Germany later this week.

Trump said, at the rallies of post-election that we will have to loot at the trade as a war.

For the United States, the singular focus on North Korea is not only naive and ineffectual, but also masks other consequential issues in the relationship that need to be addressed directly and candidly. Meanwhile, Trump has slammed China for its efforts to protect domestic industries, a main cause of excess steel production that is flooding the global market with cheap Chinese exports.

The "hits" include tariffs, duties and quotas on USA imports, anti-dumping measures, and tax incentives for exporters that could hurt American companies.

The future Economic Partnership Agreement between the European Union and Japan "will be the model of the economical order of the 21st century", Abe told the other world leaders, according to Maruyama - Trump among them.

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Mr Trump's administration is weighing whether to impose tariffs, quotas or a combination of both on steel imports under national security grounds through Section 232 of the Trade Expansion Act, even though only a fraction of United States steel is used for defence.

The EU is the second largest producer of steel in the world after China. That reference remains the only sticking point in the summit conclusions to be hashed out by leaders.

Trump's own administration is divided over whether to impose new steel trade barriers. The U.S. wasn't alone in having different views on trade, the official added, pointing at the consensus on securing a level playing field as a common stance forged at the summit.

The area will be a point of tension with China in particular amid US pressure on China to exert further pressure on North Korea, which successfully tested an intercontinental ballistic missile Tuesday.

Chinese President Xi Jinping will meet regional rival Japan's Prime Minister Shinzo Abe, at a time when both are anxious about North Korea. Germany also has a large steel industry, and German officials have been particularly concerned about what a unilateral move to impose restrictions on steel imports to the US might mean.

But Trump did not say 40 percent; he said "almost" 40 percent.

Trump had taken a more conciliatory approach with China in recent months, backing away from a threat to label Beijing a currency manipulator and saying he thought both countries could work closely together on a range of issues.

If Trump is able to use the summit to negotiate a united front against Chinese steel, he could boost the US industry without straining ties with foreign allies.

Trump's commerce secretary, Wilbur Ross, is expected to announce soon whether steel tariffs can be justified on national security grounds.

Trump's thinking about a tariff could trigger 'global recession'