Asia and Europe set to bear the burden of US trade protectionism – Financial Times

Donald Trump has repeatedly promised to take on China and its trade practices. But according to a new study, it is US allies in Asia and Europe that are set to bear the burden of a new wave of US protectionism shaping up to be the largest seen in decades. 

The study released on Monday by a leading expert on trade disputes and protectionism comes as US Commerce Secretary Wilbur Ross hurries to deliver within days a plan to impose new restrictions on steel imports, arguing that the country’s national security is at stake. 

The steel move is likely to be the most significant protectionist action taken by Mr Trump since he took office and is being watched closely by allies including Germany, which is chairing this year’s G20 summit in Hamburg next month. At that summit Angela Merkel is expected to again try to push Mr Trump to renounce protectionism. 

But the action on steel, which is aimed in large part at a flood of cheap Chinese steel on to global markets that US producers blame for the closure of US mills, is just one of a series of moves launched since Mr Trump took office. Working their way through the US trade system are moves against aluminium imports, Canadian aircraft and lumber, and Chinese solar cell and panel producers, among others. 

Together, they potentially represent the largest — and broadest — series of trade sanctions taken by the US since the Reagan administration in the 1980s, said Chad Bown, a former trade adviser to Barack Obama and World Bank economist who is now a senior fellow at the Peterson Institute for International Economics. 

By his calculations, the percentage of US imports covered by special tariffs is poised to almost double from 3.8 per cent before Mr Trump took office to 7.4 per cent, based on cases launched in Mr Trump’s first 100 days in office. 

The percentage of Chinese exports to the US hit by such restrictions is expected to rise from 9.2 to 10.9 per cent. But the amount of US imports from the rest of the world subject to new restrictions is expected to triple from 2.2 to 6.4 per cent, according to Mr Bown. 

Among the countries likely to be hit hardest are Canada, France, Germany, India, Japan and South Korea. 

The new data highlight the power Mr Trump still has to enact his “America First” trade agenda even as he tries to shake off a scandal relating to alleged Russian interference in last year’s election and struggles to advance tax and other reforms through Congress. 

Much of the attention on the Trump trade agenda has focused on his decision to pull the US out of the Trans-Pacific Partnership with Japan and 10 other economies or to renegotiate the North American Free Trade Agreement with Canada and Mexico. 

But the most concrete change so far has come in the area of trade enforcement. 

US governments in the past have often acted as a brake on requests for protection from US industries. But the Trump administration is seen as encouraging new anti-dumping and other trade cases and has been dusting off dormant statutes to take new actions itself. 

Mr Ross has vowed to start “self-initiating” anti-dumping cases, allowing the government to bring cases normally filed by companies. 

The steel investigation and a similar one relating to aluminium were launched under a 1962 law that allows presidents to restrict imports in the name of national security. The last time an investigation was even launched was in 2001. None has resulted in the imposition of restrictions since the 1980s. 

The US steel industry is pushing for the administration to take a broad view of national security, arguing that it cannot provide the steel needed for warships and other military hardware if its other business lines are threatened by Chinese dumping of steel on world markets. 

Both Mr Trump and Mr Ross have in recent days foreshadowed a dramatic move. 

“Wait until you see what I’m going to do for steel and for your steel companies,” the president told an audience in Ohio last week. 

Testifying in Congress on Thursday, Mr Ross said the steel investigation was examining “a genuine national security issue”. 

Administration officials say the result of the steel investigation will be rolled out as soon as this week. But discussions were still under way as recently as Friday over just how to present the recommendations and how quickly Mr Trump would act on them. 

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