Just in the past month, Trump has slapped tariffs on steel and aluminum imports from the EU, and has threatened a similar tariff hike on auto imports. Trump also reimposed sanctions on Iran’s oil sector that would directly affect European refiners and force European countries to stop investing in that country.
"For my friends everything, for my enemies the law" is a saying attributed to an early 20th century Peruvian president Oscar Benavides. US allies around the world in recent months must be wondering why President Donald Trump is applying the formula in the reverse order.
Just in the past month, Trump has slapped tariffs on steel and aluminum imports from the EU, and has threatened a similar tariff hike on auto imports. Trump also reimposed sanctions on Iran’s oil sector that would directly affect European refiners and force European countries to stop investing in that country.
US neighbors Canada and Mexico are getting similar treatment over their unwillingness to agree to cut the size of the US trade deficit. “Nafta is a terrible deal for the US. They cannot believe they've gotten away with this for so many decades,” Trump said on 1 June.
Trump made the dismissive remarks about Canada and Mexico just seconds after heaping praise on North Korea’s leader Kim Jong-un. “I think we're going to have a relationship and it's going to start on June 12” — when Trump and Kim plan to meet in Singapore. "I look forward to the day when I can take off the sanctions on North Korea.”
Trump’s willingness to fly halfway around the globe to meet with the leader of an impoverished country that technically still is at war with the US contrasts with two failed attempts to host a US-Mexico presidential summit. Both summits, planned for January 2017 and March 2018, failed after Trump insisted that Mexico pay for construction of a border wall to stop immigration — politically a sensitive subject for Mexico’s leaders.
“With friends like this, who needs enemies?” European Council president Donald Tusk said after Trump promised “massive sanctions” on European and other companies dealing with Iran. By contrast, Chinese president Xi Jinping has already won a promise from Trump to reverse a decision to cut Chinese telecommunications giant ZTE's access to US markets. The company violated US sanctions against Iran before 2016.
Such disparate treatment of friends and opponents can be viewed in the context of a primary concern for the US administration: reducing the US trade deficit that last year stood at $800bn. The size of the trade deficit suggests a pattern of rule-breaking by the US trading partners, commerce secretary Wilbur Ross explains.
“The rules that the US granted to Europe and Asia after World War 2 were not time denominated, they are permanent. But that’s a structural problem. It leads to a lot of inequities and a lot of trade barriers that are asymmetrical.”
Given that context, the status of long-standing US allies in Europe, Asia and North America is no longer relevant. “We are going to charge countries outside of our country that take advantage of the US. Some of them are so-called allies, but they're not allies on trade,” Trump says.
The sudden demotion in status is puzzling the US allies – and prompting countermeasures. Canada and Mexico immediately responded with tariffs on US exports. The EU is looking to target a variety of US products for tariffs, some chosen for their “Americanness” —bourbon, Harley Davidson motorcycles and blue jeans.
The Trump administration is justifying its actions on steel and auto imports by the need to protect industries vital to US national security. “It is not mainly a military thing. Infrastructure and the economy gives you the national security,” Ross says.
“It is simply ridiculous to view any trade with Canada as a national security threat to the US,” Canadian prime minister Justin Trudeau says.
Trudeau on 8-9 June is hosting the G7 summit in Quebec, bringing together Trump and the leaders of France, Germany, Italy, Japan and the UK for what promises to be a memorable discussion. The finance ministers of these countries on 1 June informed US treasury secretary Steven Mnuchin of their “unanimous concern and disappointment” over the “the tariffs imposed by the US on its friends and allies.”
But Trump is unfazed. “When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War! The U.S. has been ripped off by other countries for years on Trade, time to get smart!” he tweeted on 2 June.