San José, CA – On Friday, June 1, new U.S. tariffs of 25% on steel and 10% on aluminum imported from Canada, Mexico and the European Union (EU) went into effect. These countries supply about half of U.S. steel imports. All of the countries responded with counter-tariffs on U.S. exports that will start in a month or less. In addition, the other countries are going to be filing suit with the World Trade Organization (WTO), charging that the U.S. reason of “national security” is just a fig leaf to cover U.S. violation of WTO rules.

The Trump administration is preparing for a wider trade war by preparing to put tariffs on imported automobiles. This would affect Canada, Mexico and Europe, as well as Japan, as the U.S. now imports most of its cars (not including pick-ups and SUVs). The Trump administration seems to taking the same path that it did with China, where the Chinese response to U.S. steel and aluminum tariffs was met with even larger tariffs by the U.S.

Many commentators have noted that the Trump administration is increasingly at odds with the European Union. This began with the U.S. withdrawing from the Paris Climate accords, followed more recently by the U.S. withdrawing from the Iran nuclear agreement, both of which were strongly backed by European powers.

While most economists agree that the direct impact of the tariffs will be small, with any job gains from an increase in prices and production of steel and aluminum in the U.S. offset or more than offset by losses in industries which use steel and aluminum, such as auto, constructions, appliances, etc. This does not take into account the effect of the other countries’ tariffs on U.S. exports.

After the end of World War II, the U.S., along with the elites from Europe and Japan, set up a free trade economic structure to counter the Soviet Union and other socialist countries, while at the same time maintain U.S. economic dominance of the rest of the capitalist world. But the growing economic strength of the E.U. and Japan, and the relative decline of U.S. economic power have shaken this system. Then the entry of China into the WTO in 2001 led to the contradiction of having a socialist economic powerhouse inside a capitalist free-trade institution. Rather than giving up more say to Europe, Japan, China and other Third World countries, the Trump administration is moving towards constructing more and more trade barriers while at the same time pursuing a more aggressive military policy.

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