Trump jabbed first; now world hits back in trade fight

WASHINGTON -- The United States attacked first, imposing tariffs on steel and aluminum from around the globe and threatening to hit tens of billions of dollars in Chinese products.

Now, the world is punching back.

The European Union is set today to slap tariffs on $3.4 billion in American products, from whiskey and motorcycles to peanuts and cranberries. India and Turkey have already targeted U.S. products, ranging from rice to autos to sunscreen.

And the highest-stakes fight still looms: In two weeks, the United States is to start taxing $34 billion in Chinese goods. Beijing has vowed to immediately retaliate with its own tariffs on U.S. soybeans and other farm products in a direct shot at President Donald Trump's supporters in America's heartland.

The tit-for-tat conflict between the United States and China, the world's two largest economies, is poised to escalate from there. The rhetoric is already intensifying.

"We oppose the act of extreme pressure and blackmail by swinging the big stick of trade protectionism," a spokesman for China's Commerce Ministry said Thursday. "The U.S. is abusing the tariff methods and starting trade wars all around the world."

Cecilia Malmstrom, the EU's trade commissioner, acknowledged the EU had targeted some iconic American imports for tariffs, such as Harley-Davidson motorcycles and bourbon, to "make noise" and put pressure on U.S. leaders.

John Murphy, a senior vice president at the U.S. Chamber of Commerce, estimated $75 billion in U.S. products will be subject to new foreign tariffs by the end of the first week of July.

"We've never seen anything like this," said Mary Lovely, a Syracuse University economist who studies international trade -- at least not since countries tried to wall themselves off from foreign competition during the Great Depression.

Those personally in the line of fire are among the most concerned.

"It will be a disaster," said Nagesh Balusu, manager of the Salt Whisky Bar and Dining Room in London. He expects the European Union's tariffs to add more than $7 to the price of a bottle of Jack Daniels, which is imported from Tennessee. "It's going to hit customers, that's for sure. How they'll take it, we'll have to wait and see."

As painful as the brewing trade war could prove, many have seen it coming.

Trump ran for the presidency on a vow to topple seven decades of American policy favoring ever-freer trade among nations. He contended a succession of poorly negotiated accords -- including the North American Free Trade Agreement and the pact admitting China into the World Trade Organization -- put American manufacturers at an unfair disadvantage and destroyed millions of U.S. factory jobs.

He pledged to impose tariffs on imports from countries he said had exploited the United States. Late last month, Trump proceeded to infuriate U.S. allies -- from the EU to Canada and Mexico by imposing tariffs of 25 percent on imported steel and 10 percent on aluminum. The president justified the move by saying imported metals threatened America's national security -- a dubious justification countries have used rarely because it can be so easily abused.

And he is threatening to impose another national security-based tariff on imports of cars, trucks and auto parts.

The White House last week announced plans to slap 25 percent tariffs on 1,100 Chinese goods, worth $50 billion in imports. Trump would start July 6 by taxing $34 billion worth of products and later add tariffs on an additional $16 billion in goods.

The Chinese have said they will respond in kind. Trump said he would then retaliate against any counterpunch from Beijing by targeting an additional $200 billion in Chinese products, and then yet another $200 billion if China refused to back down. All told, the $450 billion in potential tariffs would cover nearly 90 percent of goods China sends to the United States.

The tariffs and threats have begun to take a toll. Steel and aluminum prices, for example, have shot up and supplies have become scarce.

"Steel pricing is usually relatively stable," said Al Rheinnecker, CEO of American Piping Products in Chesterfield, Missouri, which distributes steel pipe to numerous industries. But "since April, you can quote something on Monday, and if the customer doesn't buy it right away, you may have to raise the price on Thursday."

So far, Rheinnecker has managed to pass along the higher costs to his customers. He's not sure how long that will last.