Trump tariff plan may spark ‘undesirable chain reaction’

A factory worker pours molten iron at Hyundai-Steel Co in Dangjin, Chungcheongnam-do, South Korea Keystone

Switzerland and 17 other members of the World Trade Organization (WTO) have expressed their fears over United States President Donald Trump’s decision to slap tariffs on steel and aluminium imports, with most urging the United States to reconsider. 

In Geneva, leading trading partners of the US outlined their misgivings over Trump’s proposed tariffs of 25% on steel and 10% on aluminium, and fears of tit-for-tat trade actions, a WTO External linkspokesman said on Wednesday. 

China raised the issues at a closed-door WTO general counsel meeting on Wednesday, and ambassadors and other officials from Australia, Brazil, the European Union, India, Japan, Norway and Russia warned US action would be unjustified and improper. 

“Our concern is that this measure, which is widely contested by various countries, may cause other protectionist reactions. This could cause an undesirable chain reaction,” Swiss ambassador to the WTO Didier ChamboveyExternal link told swissinfo.ch. 

“Certain Swiss interests are also potentially affected. It’s not the main market but it’s hard to estimate the impact on the Swiss economy as we don’t know the details of the measure, which will be published at the end of the week.” 

In 2017, Switzerland exported to the US aluminium products worth CHF30 million ($32 million) and steel products worth CHF57 million.

Trump has long complained against what he deems unfair trade practices by states and has outlined plans to impose duties on steel and aluminium to counter cheap imports, especially from China, that he says undermine US industry and jobs. 

We are on the losing side of almost all trade deals. Our friends and enemies have taken advantage of the U.S. for many years. Our Steel and Aluminum industries are dead. Sorry, it’s time for a change! MAKE AMERICA GREAT AGAIN!

— Donald J. Trump (@realDonaldTrump) March 5, 2018External link

The EU, however, says it is ready to retaliate against the US over Trump’s proposed tariffs on steel and aluminium, with counter-measures against iconic US products like Harley Davidson motorcycles, Levi’s jeans and bourbon. 

WTO Director-General Roberto Azevedo has expressed concerns about a trade war and appealed for cool heads to prevail. 

“Many [states] said they feared tit-for-tat retaliation which could spiral out of control, damaging the global economy and the multilateral trading system,” WTO spokesman Keith Rockwell said. 

Chambovey said it was hard to predict what would happen next. 

“We need to see how far the US measure goes and the reactions of countries affected by this plan. It’s probable that certain countries may try to file a complaint with WTO’s Dispute Settlement Body if they believe the US measure does not meet American obligations at the WTO,” he declared. 

The ambassador would not be drawn on whether Switzerland would sign up to such a complaint, adding simply “we intend to defend our interests and it will depend on how far this measure goes”.

This would not be the first time that countries have contested American steel plans before the WTO. In 2001-2002, Switzerland and seven other countries, including China and Brazil, appealed to the WTO against US safeguard measures on a wide range of steel products and won the appealExternal link.