Trump White House has signalled it would water down plans for contentious tariffs, in the face of threats from trade partners, financial market jitters and a revolt within Donald Trump’s own Republican party.
The US administration said the president still planned to sign off on global steel and aluminum tariffs as early as Thursday, but indicated there could yet be exemptions for infuriated allies.
“There are potential carve-outs for Mexico and Canada, based on national security. And possibly other countries as well,” press secretary Sarah Sanders told reporters at the White House.
The Washington Post, citing administration officials, later reported the two countries would get a “temporary exemption” of 30 days.
From shortly after dawn, administration big guns rushed to the cameras, trying to limit the fallout from a Trump policy that has already sparked fears of a global trade war, rattled stock markets and prompted the top White House economic advisor to quit.
Commerce Secretary Wilbur Ross insisted the tariffs were “thought through” and not the caprice of a president running a White House that appears to be careering off the rails.
“We’re going to have sensible relations with our allies,” he told CNBC, “we’re not looking for a trade war.”
But Trump’s impromptu move has already set Washington on a collision course with its largest trading partner the European Union, which sounded a stern warning Wednesday as it readied to retaliate with targeted tariffs of its own on everything from steel to denim to peanut butter.
“Trade wars are bad and easy to lose,” EU President Donald Tusk told a news conferenceWednesday, directly rebuffing Trump’s assertion last week that they were “good and easy to win.”
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Warning of “a serious trade dispute” between Washington and the rest of the world, Tusk said leaders of the bloc would hold emergency talks on the issue on March 22-23.
Markets sold-off early morning on news that Wall Street favorite Gary Cohn had resigned from the White House in protest at Trump’s decision.
Global stocks ended mixed on Wednesday and then opened higher in Asia on Thursday, boosted partly by easing fears of a trade war.
Treasury Secretary Steve Mnuchin joined the damage limitation effort, claiming that the tariffs, although still in flux, would not hurt the administration’s projections for three per cent growth.
“We’re comfortable that we’re going to manage through this so that it is not detrimental to our growth projections,” he told Fox Business.
In Washington, a fierce battle over Trump’s proposals raged behind the scenes.
Trump’s move has surprised and angered allied lawmakers and the Republican-controlled Congress has whispered about legislation that would block their own president from acting.
More than a hundred Republican congressmen sent him a letter expressing their “deep concern” about the consequences of tariffs and recommending more targeted measures.
Even Trump’s most accommodating allies have begun to speak out against what amounts to a major break with Republican orthodoxy.
“There is a lot of concern among Republican senators that this could sort of metastasize into a larger trade war,” Senate majority leader Mitch McConnell told reporters.
“Many of our members are discussing with the administration just how broad, how sweeping this might be,” he added.
“There’s a high level of concern about interfering with what appears to be an economy that’s taking off in every respect.”
