US allies see Trump’s steel tariffs as an insult

TOKYO — No world leader has tried harder to get on President Donald Trump's good side than Japanese Prime Minister Shinzo Abe. Whether racing to New York the day after the 2016 election and presenting Trump with a $3,755 gold-plated golf driver, or taking him out on the golf course and serving hamburgers for lunch, Abe has cultivated a close personal relationship with his American counterpart.

And on a policy front, Abe has been an enthusiastic supporter of almost everything Trump has said, especially when it comes to putting "maximum pressure" on North Korea.

But now, Japan, which is not just led by a friendly politician but is a key security ally of the United States, looks likely to be slapped with tariffs on its steel exports to the United States. And to add insult to injury, the reason, Trump says, is rooted in national security.

"The U.S. is suddenly treating Japan as a target," said Tsuyoshi Kawase, a professor of international trade policy at Sophia University in Tokyo. "The Japanese side is bewildered and confused."

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That bewilderment, along with anger and frustration, has rippled across the capitals of U.S. allies – countries that figured, no matter the bumps in relations with Washington, they would wind up on the same side against China in any dispute over steel or unfair trade practices. And yet suddenly there is talk of a trade war between the United States and its supposed friends.

Even those leaders who have grown accustomed to the zigs and zags of the Trump White House say this could be different. The consequences of Trump's targeting other priorities – the Paris climate agreement and the Iran nuclear deal chief among them – have not had an immediate, concrete effect. But the tariffs could soon put citizens in ally nations out of work, and if a trade war escalates, all sides could feel the pain, officials from Brasília to Brussels to Seoul say.

"The impulsiveness of the decision caught us by surprise," said Diego Bonomo, the head of foreign trade at the National Trade Association of Brazil. His country is the second-largest exporter of steel to the United States.

"It's an economic shot in the foot," he said. "When they impose tariffs to hurt Brazilian steel, they hurt their own coal exports and exports of products that use steel."

Trump on Thursday signed an order imposing import tariffs of 25 percent for steel and 10 percent for aluminum, despite a furious last-minute lobbying effort against the decision from Washington's closest allies and top Republicans.

He excluded Canada (the top exporter of steel and aluminum to the United States) and Mexico (No. 4 for steel) on the condition they meet the White House's demands on revisions to the North American Free Trade Agreement (NAFTA). And he left open the possibility that additional nations with a "security relationship" with the United States could seek an exemption.

Trump's order came hours after Japan and 10 other countries formalized a new Pacific free-trade agreement, notably without the participation of the United States, which dropped out of those talks early in the Trump administration.

The announcement also upended a Saturday meeting of the top U.S., EU and Japanese trade negotiators, who were originally scheduled to convene to talk about how to take on what they say is China's unfair support for its steel industry. Instead, officials say, the meeting may turn out to be the first salvo in an unfolding and escalating trade skirmish.

"We see this as an opportunity to have a frank discussion," a European official said, speaking on the condition of anonymity to discuss internal meeting preparations. "There's no avoiding the elephant in the room."

EU officials have flagged countermeasures targeting $3.5 billion in trade with the United States, including bourbon, Harley-Davidson motorcycles and Levi's jeans – all produced in politically sensitive areas for top U.S. politicians.

"We will defend our interests" if necessary, EU foreign policy chief Federica Mogherini said at a conference in Brussels. "Protectionism is not a good idea for the U.S. economy."

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One danger, though, is that the sides become locked in a cycle of escalation, dealing a blow to the free-trade system at the heart of the modern global economy. Trump has indicated that he would like to target European car manufacturers next.

The frustration is compounded by Trump's national security rationale. In fact, say U.S. allies, there is no national security risk to importing steel and aluminum from one's closest military partners. And any move that damages their own industries also hits at overall NATO readiness and hurts trust among allies, they say.

Tariffs "might be attractive for the United States now, but in the long term it will have detrimental effects on America's worldwide influence," French Foreign Minister Jean-Yves Le Drian told the French CNews broadcaster.

Now allies will have to make those arguments to the White House to try to win exceptions.

Trump said Thursday he would be "very flexible" about imposing the tariffs.

"I'll have a right to go up or down depending on the country, and I'll have a right to drop out countries or add countries," he said.

A number of U.S. allies say that if the tariffs ultimately hit their countries, they will file a complaint with the World Trade Organization. WTO rules allow countries to impose tariffs for reasons of national security but restrict supports for domestic industries.

But that response could also backfire, some analysts say. If the WTO rules against the White House, and Trump chooses to ignore the ruling, that could effectively spell the end of the organization.

Still, Trump's leaving open the door to exceptions kept alive the hope that the tariffs could still be sidelined. One European official in Washington said that as European diplomats made the rounds of congressional offices this week to argue that the tariffs would be needless and damaging, they found it hard to sway opinions – because everyone they met with was already on their side.

"To be honest, everyone kind of agrees with us," said the official, who spoke on the condition of anonymity to discuss closed-door European efforts. "I haven't found anyone who says, 'No no, the president is right.' "

The prospect of tariffs also has launched a flurry of lobbying by South Korea, the third-largest exporter of steel to the United States. Trade Minister Kim Hyun-chong is on his second trip to Washington in two weeks, meeting with Commerce Secretary Wilbur Ross and Trade Representative Robert Lighthizer, as well as key lawmakers, such as Senate Finance Committee Chairman Orrin Hatch, R-Utah. That's in addition to the campaign being waged in Washington by a special South Korean trade task force.

The prospect of steel tariffs follows on the heels of similar levies on solar panels and washing machines. But it comes at a sensitive time on the front of North Korean diplomacy.

South Korean President Moon Jae-in has been going all-out to facilitate dialogue between North Korea and the United States, creating the prospect of a lull in tensions, if not the start of a thaw.

But the tariffs could have a "negative impact on South Korea-U.S. relations," South Korea's foreign ministry said this week.

Japan, meanwhile, is trying to work behind the scenes to be added to the exemption list.

"Japan is taking a quiet approach, trying not to let the trade issue take a toll on the overall alliance," said Tsuneo Watanabe, a senior research fellow at the Sasakawa Peace Foundation.

"If Japan protests openly, it would just lead to a tit-for-tat with Trump, and Japan knows that's something it shouldn't do," he said.

Japanese officials, like their counterparts in Europe and elsewhere, have said their steel industry poses no national security threat to the United States.

"Exports of high-quality steel and aluminum from Japan, a U.S. ally, do not damage the U.S.' national security in any way," Hiroshige Seko, Japan's trade minister, told reporters in Singapore this week. "Instead, they are contributing to the U.S. economy and creating jobs."

Many in Japan worry that Trump's effort may ultimately undermine global security, not bolster it.

"When trade friction grows between allies, the alliance is weakened," Watanabe said. "But it's unclear if Trump understands that."

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Fifield reported from Tokyo. Birnbaum reported from Brussels. Marina Lopes in São Paulo and Quentin Ariès in Brussels contributed to this report.