America’s Allies Lose It Over Trump’s Tariffs

(Bloomberg) --

For U.S. allies frustrated with President Donald Trump’s “America First” policy, his decision to slap tariffs on imported metals from Europe, Canada and Mexico on national security grounds may have been the final straw.

Canada's normally affable premier, Justin Trudeau, said the measures were “totally unacceptable” and retaliated with tariffs on $12.8 billion of U.S. goods. “We have to believe that at some point their common sense will prevail,” he lamented.

Amid fears of a transatlantic trade war, the European Union also plans to strike back by imposing tariffs on U.S. imports including Harley-Davidson motorcycles and bourbon.

German Finance Minister Olaf Scholz called the U.S. decision “illegal” and the security justification “spurious,” while European Commission chief Jean-Claude Junker said yesterday: “Whenever I’m thinking about Trump, I'm lost.”

The confrontation has overshadowed a meeting of Group of Seven finance ministers and central bankers in a Canadian ski resort, and will likely dominate a G-7 leaders' summit hosted by Trudeau next week.

The biggest risk now is that Trump has touched off a spiral of tit-for-tat sanctions with America's closest allies that will further alienate them and possibly strengthen China's hand.

Global Headlines

Unreliable superpower | Trump's penchant for policy reversals is prompting questions about U.S. credibility among allies and rivals alike, Marc Champion writes. The administration’s decisions to withdraw from the Iran nuclear deal, abandon a trade ceasefire with China, remove exemptions on steel and aluminum tariffs, and cancel — and then potentially revive — a planned summit with North Korean leader Kim Jong Un are fueling doubts among delegates as Asia’s biggest annual security forum gets under way today in Singapore.

Exit Rajoy | Spanish lawmakers voted today to oust Prime Minister Mariano Rajoy and replace him with Socialist rival Pedro Sanchez. Rajoy’s resistance was broken yesterday, when he abandoned parliament as one party after another declared its support for the no-confidence motion. Instead, he spent the afternoon holed up with advisers in a Madrid restaurant, only emerging around 10 p.m.

Italian job | Italy’s populist Five Star Movement and League parties will sweep into power today when Giuseppe Conte, a law professor with no political experience, is sworn in as prime minister. President Sergio Mattarella accepted a revised cabinet after the coalition replaced euroskeptic economist Paolo Savona, whose nomination as finance minister spooked markets. Savona, who’s repeatedly urged Italy to prepare a plan to abandon the euro, will now be responsible for European affairs.

Special delivery | Trump's due to receive a letter today from Kim when he hosts a North Korean delegation led by former spy chief Kim Yong Chol at the White House. “I look forward to seeing what’s in the letter,” Trump told reporters. Preparations for a possible June 12 summit with the North Korean leader in Singapore are “going along very well,” he said. With 10 days to go, the president needs to decide soon if he's going to meet Kim or not.

Culture clash | With general elections in Turkey this month, secularists are on the defensive in trying to protect their socially relaxed way of life, Donna Abu-Nasr and Cagan Koc report. While the economy will be the main political battlefield after the lira recently hit an all-time low, there’s concern over President Recep Tayyip Erdogan’s vow to raise a “more pious generation” as he’s gradually moved the country closer to its Islamic religious roots.

What to Watch

— Look for our special Sunday edition from this weekend's Shangri-La security forum in Singapore where defense chiefs from around the globe discuss North Korea, China and the Trump administration.

— Former Spanish Finance Minister Luis de Guindos starts his job as European Central Bank vice president today, as the Frankfurt-based institution celebrates its 20th anniversary in troubled times.

And finally... Mark Zuckerberg faced a fresh barrage of complaints about Facebook's poor handling of user data and its role in alleged Russian meddling in the U.S presidential election, this time at a meeting of his own shareholders. The company struggled to keep order at times, kicking out one woman within minutes for repeated interruptions. Zuckerberg repeated pledges to make Facebook more transparent, minutes after shareholder proposals for greater oversight were defeated.

 

©2018 Bloomberg L.P.

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