The US under the guidance of the Donald Trump administration takes a hard-line approach towards international trade and yesterday they announced that they would start levying tariffs on imports of steel and aluminium from the EU, Canada and Mexico. This comes just days before the G7 leaders are due to meet in Canada and sets the stage for a trade war with its closest allies. For months the EU has stated that if the US were to impose tariffs, they would retaliate.

EU Commissioner Jean-Claude Juncker said, “This is a bad day for world trade,” and prior to the announcement from the US, the French finance minister warned that the EU would have no choice but to enter a trade war with the them if any tariffs were imposed.

EU and Nafta reactions

The reaction has been understandably widespread condemnation but the move itself is likely to be a negotiating tactic just before the G7 summit and Trump has long seen international trade as “unfair” towards the US. This just highlights that this very approach to global trade hasn’t worked with China as the exports from them of steel and aluminium has been negligible, US trade with the EU was worth around $720 billion whereas with China, it was $636 billion. Which means he has moved on to attacking economic and military allies in a bid to get at China.

Canadian Prime Minister Justin Trudeau called it an “affront” to the 150-year close relationship the two countries’ have had and announced that they will impose a 25% tariff on several US steel products that include railway tracks, piping and steel sheets.

But they plan to go further by applying a 10% tariff on a variety of items that include: Orange juice, whiskies, coffee, soups, waters, playing cards, felt-tipped pens, inflatable boats, lawnmowers, sleeping bags, Yoghurt, soya sauce, strawberry jam, "mixed condiments", pizza and quiche

The EU who called the tariffs “totally unacceptable” have released a 10-page document of goods from the US they plan to impose tariffs on and these include: Corn and other agricultural products, steel and industrial products, cosmetics, consumer goods, motorbikes and pleasure boats.

Mexico hit back quickly and announced that they would impose tariffs on Flat steel, hot and cold foil products, piping, cold cuts, pork chops and sausages amongst other things.

The effect on the UK

What does this mean for the UK though? With the UK planning on leaving the EU, this highlights the volatility of entering a trade partnership with the US under the Donald Trump administration.

Brexit has scene Theresa May ally herself with strongmen and despots across the world and that includes trying to remain a close ally of the US. But this move from the US just underlines that the current administration puts the idolised ‘America first’ nationalist rhetoric ahead of global allies and trade. But fails to recognise that this is damaging to the US economy which will be felt by poorest.

Tariffs such as these always benefit the wealthiest over the poorest as it is only the larger businesses that can survive the inevitable loss of trade partners across the globe. This further creates an economic system that goes against the ideas presented by Adam Smith in the Wealth of Nations about global free trade and is likely to only create monopolies.

But Donald Trump doesn’t consider the wider impact on policies such as these and even if the Republican’s do, it is their desire to see the US remain as the strongarm and maintain their global power.

Global power structures are changing and the US are fighting to maintain top spot but are closing themselves off from the rest of the world in the process and it is likely to affect the UK negatively as government policy has been to push the EU away and maintain close ties to the US despite the continued diplomatic failures around the world.