Donald Trump defiant after global criticism of steel, aluminium tariffs

U.S. President Donald Trump struck a defiant tone on Friday, saying trade wars were good and easy to win, after his plan to put tariffs on imports of steel and aluminium triggered global criticism and a slide in world stock markets.

The European Union raised the possibility of taking countermeasures, France said the duties would be unacceptable and China urged Trump to show restraint. Canada, the biggest supplier of steel and aluminium to the United States, said it would retaliate if hit by U.S. tariffs.

U.S. stocks opened sharply lower on Friday as investors fretted about a potential global trade war.

Trump said on Thursday that a plan for tariffs of 25 percent on steel imports and 10 percent on aluminium products were designed to safeguard American jobs in the face of cheaper foreign products and would be formally announced next week.

"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," Trump tweeted on Friday.

"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 wrote. It was not clear which country he was referring to.

The prospect of retaliation from Canada, China and Europe sent world stocks tumbling towards a 2.5 percent weekly loss as investors turned to traditional safe havens such as government bonds, gold and the Japanese yen.

ArcelorMittal SA, the world`s biggest steelmaker, slumped nearly 5 percent and shares in automakers such as Fiat Chrysler suffered on concerns U.S. tariffs could increase the cost of key materials used in cars.

"It is a real worry because Europe is an open global economy so it isn`t just about U.S. versus China," said Ian Ormiston, European equity fund manager at Old Mutual Global Investors. "And we will see retaliation, there are no two ways about it."

Trump believes the tariffs will protect American jobs but many economists say price increases for consumers of steel and aluminium, such as the auto and oil industries, will destroy more jobs than they create.

Home appliance maker Electrolux said it was delaying a $250 million expansion of its plant in Tennessee as it was worried US steel prices would rise and make manufacturing there less competitive.

But Turkey`s leading steelmaker Borusan Holding said it might expand its U.S. steel pipe factory in Texas because of the proposed tariffs.EU SAFEGUARD MEASURES

The European Commission, the EU`s executive, called the U.S. tariffs a blatant intervention that amounted to protectionism and promised to act "firmly" in response.

The EU, which sees itself as a global counterweight to a protectionist-leaning Trump, made no mention of retaliation but spoke of countermeasures that conform with World Trade Organization (WTO) rules.

"We see international trade relations as a win-win situation," a European Commission spokesman said.

"We don`t see this as a situation where, like in a zero-sum game, one party loses because another party wins. Trade is beneficial for everyone. It needs to take place on the basis of rules and these rules are in place."

Safeguard measures, last deployed by Europe in 2002 after then U.S. President George W. Bush imposed steel import duties, would be designed to guard against steel and aluminium being diverted to Europe from elsewhere if U.S. tariffs come in. Graphic: U.S. steel imports: http://tmsnrt.rs/2oPeo1zBut to conform with WTO rules such measures would have to apply to imports from all countries and could also hit producers including China, India, Russia, South Korea and Turkey.

"A trade war between Europe and the United States will only have losers," French Finance Minister Bruno Le Maire said.`PRETTY COMMITTED`

Steel has become an important focus for Trump, who said he would restore the U.S. industry and punish what he sees as unfair trade practices, particularly by China.

While U.S. officials said some details of the tariffs still needed to be ironed out, White House spokeswoman Sarah Sanders said on Friday the levels of 25 percent for steel and 10 percent for aluminium were not expected to change.

"This is something he`s wanted to do for a while. Never say never, but I think he`s pretty committed to moving this forward," Sanders told a press pool.

Republican U.S. Senator Ben Sasse, who has been critical of Trump, said there were only losers in trade wars.

"Kooky 18th century protectionism will jack up prices on American families - and will prompt retaliation," he said in a tweet. "Make no mistake, if the president goes through with this it will kill American jobs."

The United States is the world`s biggest steel importer, buying 35.6 million tonnes in 2017. Canada is the leading supplier, accounting for 16.7 percent, followed by Brazil at 13.2 percent and South Korea at 9.7 percent.

Officials were unable to say immediately whether the tariffs would include imports from Canada and Mexico, Washington`s partners in the North American Free Trade Agreement (NAFTA), which is being reworked.

"Should restrictions be imposed on Canadian steel and aluminium products, Canada will take responsive measures to defend its trade interests and workers," Foreign Minister Chrystia Freeland said, calling any trade restrictions "absolutely unacceptable".

Mining company Rio Tinto, the largest producer of aluminium in Canada, Alcoa Corp and the United Steelworkers union, which represents workers in the United States and Canada, all said Canada should be spared tariffs.

Although China accounts for only 2 percent of U.S. steel imports, its massive industry expansion has helped produce a global steel glut that has driven down prices.

"China urges the United States to show restraint in using protective trade measures, respect multilateral trade rules, and make a positive contribution to international trade order," Chinese Foreign Ministry spokeswoman Hua Chunying said.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)