Data drive: Risks of trade frictions broadening

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Published: March 24, 2018 4:08:46 AM

Given how the United States runs significant goods-trade deficit with major trading partners like China, Mexico, Japan, Germany, Italy, India and Korea, President Donald Trump imposed heavy tariffs on imported steel (25%) and aluminium (10%) from all countries, except Canada and Mexico.

Data drive, United States, China, aluminium import tariffs, steel import tariffs, china, NAFTAThe President also signed an executive memorandum that will impose tariffs on up to billion of Chinese imports, a move that could flare up already tense trade relations between the two countries.

Given how the United States runs significant goods-trade deficit with major trading partners like China, Mexico, Japan, Germany, Italy, India and Korea, President Donald Trump imposed heavy tariffs on imported steel (25%) and aluminium (10%) from all countries, except Canada and Mexico. Other countries would have to negotiate with US Trade Representatives if they want exemptions from the steel and aluminium import tariffs. The President also signed an executive memorandum that will impose tariffs on up to $60 billion of Chinese imports, a move that could flare up already tense trade relations between the two countries. China, which has a trade surplus of $375 billion with the US, said it may target 128 US products, like wine, fresh fruit, dried fruit and nuts, and steel pipes, with an import value of $3 billion.

A report by Morgan Stanley says the direct impact on global trade and economic growth from the trade measures (on solar panels, washing machines, steel and aluminium) will be limited as it will only affect an estimated 1.7% of US goods imports, taking into account exemptions for Mexico, Canada and Australia.
Since assuming office, Trump has taken a hard line on trade, abandoning a 14-nation Pacific trade pact and threatening to pull out of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

An increase in trade frictions would pose downside risks to global growth, particularly if there are more aggressive responses from major trading partners like China. It would also move the world closer towards a protectionist push scenario.

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