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TWN
Info Service on WTO and Trade Issues (Apr25/02) Geneva, 28 Mar (D. Ravi Kanth) — United States President Donald Trump on 26 March seemingly caused fresh tremors in the global trading system with the announcement of 25% tariffs on imports of cars and auto parts, on top of the reciprocal tariffs to be imposed by the US on its major trading partners on 2 April. Announcing his plans to impose the 25% tariffs on imports of cars and auto parts in the Oval Office, President Trump made it known that 2 April will be a grand day of “Liberation” when allegedly historic injustices committed by America’s trading partners will be settled, according to his video comments. Later, he issued two posts on his Truth Social website on 26 March, saying that “LIBERATION DAY IN AMERICA IS COMING, SOON,” in apparent reference to the reciprocal tariffs to be imposed on 2 April. He also said: “FOR YEARS WE HAVE BEEN RIPPED OFF BY VIRTUALLY EVERY COUNTRY IN THE WORLD, BOTH FRIEND AND FOE. BUT THOSE DAYS ARE OVER – AMERICA FIRST!!!” Trump also threatened Canada and the European Union, two major exporters of cars and auto parts to the US, that if they initiate retaliatory measures against American products, then, he will impose “large scale” tariffs. “If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”, he wrote in the post. Earlier, President Trump had delayed the hefty tariffs on Canada and Mexico, while doubling the 10% tariff against China. In addition, he had imposed a 25% tariff on all aluminium and steel products entering the US market. It is increasingly becoming a “whirlpool of tariffs” on almost all items, said people familiar with the development. The Economist magazine, in an article in its Leaders section on 27 March, titled “The cost of uncertainty”, criticized President Trump’s latest auto tariffs as well as the upcoming reciprocal tariffs to be imposed on 2 April. It wrote that “The liberation America needs is from the paralysing uncertainty brought about by Mr Trump’s chaotic approach.” Earlier, the London-based publication urged the affected countries to toughen up their stance against the tariffs imposed by President Trump. Surprisingly, it now appears to have changed its stance, suggesting that retaliatory measures would induce “more pain” and “carries a cost,” as retaliation might stoke further escalation from the US. The World Trade Organization’s leadership has remained silent on the allegedly unilateral tariffs imposed by the US. In fact, the WTO’s Director-General, Ms Ngozi Okonjo-Iweala, is yet to make a substantive statement on the spate of tariffs imposed by the US on all members of the global trade body. RETALIATION ON THE CARDS In separate rather nuanced responses, Canada, Japan, Korea, and the EU have conveyed their intention to either impose or consider retaliatory measures against President Trump’s latest threat of 25% tariffs on imports of cars and auto parts. Mexico, the most likely affected country from the 25% tariffs, is yet to come out publicly on what it intends to do in terms of retaliatory measures. Though the US, Mexico, and Canada struck a revised free trade agreement during President Trump’s first term on zero duty treatment for all goods crisscrossing the three countries, the proposed action by the White House has put paid to that agreement, said people familiar with the development. The Canadian Prime Minister Mark Carney said his officials will chalk out the next course of action after examining the language of President Trump’s executive order. “It’s clear that this is a violation and he has betrayed our trade agreement,” said Carney, according to a news report in the Wall Street Journal (WSJ). Expressing regret over President Trump’s proposed decision to impose 25% tariffs on cars and auto parts, the European Commission’s President Ursula von der Leyen gave a rather ambiguous response. “The EU will continue to seek negotiated solutions, while safeguarding its economic interests,” von der Leyen said on 26 March. According to the WSJ report, a US administration official said the proposed 25% tariffs “would cover finished automobiles and automotive parts.” The US administration had considered exempting auto parts from the tariffs. But components that are compliant with the US-Mexico-Canada Agreement would remain tariff-free until the Commerce Department “establishes a process to apply tariffs to their non-US content,” the White House deputy press secretary Harrison Fields wrote online, the WSJ report suggested. Further, the proposed 25% tariffs would “add to existing duties, including a 2.5% tariff imposed by the US, as well as existing 25% tariffs on light trucks, known as the “chicken tax”,” the senior administration official said, according to the WSJ report. Besides, the auto tariffs will be added “on top of 25% tariffs on goods from Canada and Mexico that Trump imposed because he said those countries weren’t doing enough to disrupt the illicit fentanyl trade,” the WSJ report suggested. Meanwhile, according to a report in the Financial Times on 27 March, Japan’s Prime Minister Shigeru Ishiba indicated that “every option” was under consideration, while South Korea promised an emergency response. In contrast, President Claudia Sheinbaum of Mexico suggested retaining preferential tariff treatment in talks with the Trump administration. “We are the only country that has this level of communication with the US government,” she said. The United Kingdom ruled out any retaliatory measures. According to the FT report, the UK chancellor Rachel Reeves signalled that London will “not do anything to escalate these trade wars.” However, President Trump has said somewhat emphatically that he would not grant any concessions or exemptions like he did during his first term in office. +
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