Trump insists ‘trade wars are good, and easy to win’ after vowing new tariffs

WASHINGTON – President Donald Trump on Friday continued bucking his advisers and GOP leaders by acknowledging for the first time he could be triggering a global trade war by imposing tariffs on steel and aluminum.
And a few hours later he said that this was just the beginning, promising "RECIPROCAL TAXES" against any country that has an import duty on U.S. goods or services.

In a series of Twitter posts, the first of which was launched before 6 a.m., Trump argued that the United States was being ripped off by other countries because the U.S. imports more goods from other countries than it exports to them.

Many economists and trade experts have said this is how free trade works, particularly because the United States is the world's wealthiest nation and wants access to foreign markets. But Trump believes that this is a reflection that importers take advantage of weak U.S. trade policies.

"When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!," he tweeted.

Trump is imposing the steel and aluminum tariffs by utilizing legal provision that allows the White House to take steps if it can argue that imports threaten the national security of the United States. Trump's comments on Thursday and his Twitter posts on Friday made no mention of national security but, instead, referenced what he said was an unfair dynamic where the U.S. buys more from other countries than those nations buy from the U.S.

In a subsequent Twitter post, Trump threatened to hit any country in the globe with "RECIPROCAL TAXES" if it has an import duty on U.S. goods or services. It's unclear what this means or how it would work.

The Twitter post suggests Trump is not worried about the blowback from enacting a protectionist trade agenda. It could mean that he is equally willing to walk away from efforts to renegotiate the North American Free Trade Agreement and try to terminate that pact if he doesn't get terms that he demands later this year.

Global stock markets fell sharply Friday on both worries over Trump's planned tariffs and his cavalier comments on a possible trade war. Losses in Asia were led by Japan's Nikkei, which closed down 2.2 percent. In Europe, Germany's DAX was off by more than 2 percent in midday trading. France's CAC 40 and the FTSE 100 in London also slumped.

Trump has made numerous assertions about enacting a nationalist trade agenda since the 2016 campaign, but senior advisers prevented him from following through on many of his instincts before this week.

On Thursday, Trump shocked much of Washington and the world by announcing he would impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports, with details to be ironed out by next week. The announcement won support from some labor groups, including the AFL-CIO, but drew alarm from numerous business groups and sent the U.S. stock market tumbling.

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Canadian officials said the steel and aluminum tariffs would be unacceptable and that they would retaliate if it affected their exports to the United States. A number of other countries also expressed alarm. German politician Bernd Lange, who heads the trade committee at the European Parliament, shot back: "With this, the declaration of war has arrived."

Eswar Prasad, professor of trade at Cornell University, said Trump's embrace of broad and stiff import restrictions had little precedent in the past 100 years. He said Trump could succeed in limiting U.S. imports but it could come at the cost of limiting U.S. exports, hurting growth and trade around the world.

"What we have seen in the last 24 hours is something much, much broader, and could escalate into very high levels of tariffs that affect a lot of trading partners," he said. "There is no immediate historical precedent to this."

But some of Trump's supporters in the tariff decision said they were undeterred. Commerce Secretary Wilbur Ross, speaking to CNBC, said the impact of the increase would be broad but not as painful as many companies are alleging, holding up soup and soda cans that he said would be hardly impacted.

He said other countries would only lose if they vowed to respond with tariffs on U.S. agricultural products, as it would drive up costs for their own consumers.

"This is scare tactics by the people who want the status quo, the people who have given away jobs in this country who have left us with an enormous trade deficit," he said.

A number of Republicans on Thursday said Trump likely hadn't thought through the repercussions of these tariffs, warning that countries would respond by imposing tariffs on U.S. farm exports in a way that punishes American businesses that have nothing to do with the steel and aluminum industries.

Trump and some of his senior advisers have accused China of flooding the world with cheap steel and aluminum in a way that forced many U.S. smelters to close because they could not compete with the Chinese on low prices. Trump believes that tariffs, even on steel produced by other countries, will help revive the U.S. steel and aluminum industries.

But trade wars are unpredictable and escalate quickly.

White House National Economic Council Director Gary Cohn tried to prevent Trump from pursuing the tariffs but was bulldozed by other advisers who thought the changes were necessary and would fulfill promises Trump made while campaigning, according to people familiar with the talks.

It could not be immediately learned what Trump believes a "trade war" will look like and how it will be easy for the United States to win.

Typically, trade wars result when countries increasingly shut off access to their markets, escalating barriers in a way that hurts exporters in both nations. The United States exported $1.5 trillion in goods and services last year and imported $2.3 trillion in goods and services, according to the Census Department. The three-largest U.S. trading partners are China, Canada and Mexico.