Trade war: ‘Europe United’ as European Union and Mexico respond to USA tariffs

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Donald Trump's move to slap penalties on imports from USA allies including the European Union is moving the country to the brink of a global trade war as the White House tries to wrest concessions from trading partners that are threatening to retaliate.

The US today announced the end of exemption on steel and aluminum tariffs on imports from European Union, Canada and Mexico.

The move follows a breakdown in talks the Trump administration's economic team held with European partners in Paris this week and threatens to potentially roil global markets and trickle down to American companies and consumers if the countries carry through with threats of retaliatory actions. In announcing the tariff decision, Ross said the talks are taking longer than the USA had hoped.

"This is a bad day for world trade", he said.

"We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved", he said.

Trump has said the tariffs were necessary to protect US national security, but they were widely criticized by foreign leaders, USA business groups and even some labor groups as being ill designed and potentially damaging to the USA economy.

Mr Cramer, who hosts CNBC's Mad Money, said European leaders are in "over their heads" as the trade battle continues with Donald Trump.

"The Trump people are deluded if they think Canada will offer additional concessions just because of this", he said.

U.S. stock markets sank after the tariff announcement, but Ross tried to brush off the decrease by pinning some blame on a weaker than expected print for U.S. new home sales. On April 30, he extended for 30 days the temporary exemption from the steel and aluminum tariffs for Canada, Mexico and the European Union to allow for further negotiation.

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Before the tariffs were announced, Canadian Foreign Minister Chrystia Freeland said the Canadian government would take steps to protect jobs and industry, calling the U.S. justification "frankly absurd".

"Mexico has indicated on repeated occasions that this type of measure under the criteria of national security are not adequate nor justified", the government said in a statement.

"The government is absolutely prepared to and will defend Canadian industries and Canadian jobs".

Despite media speculations that the USA could possibly introduce long-term exemptions from the tariffs for its close allies, Trump has opted for moving ahead with steel and aluminium duties.

The consequences of USA steel and aluminum tariffs for Canada's economy are expected to be modest.

And despite the picking and choosing of which allies that the USA decides to slap with these tariffs, Ross defended the US legal justification that they are being implemented under law meant to protect US national security. Canada and Mexico have also threatened retaliation, but have not publicly indicated which USA products they would hit.

The initial tariffs were announced in March by the US President Donald Trump, who claimed that the US had been treated unfairly by its trade partners for years.

The investigation announced by the Department of Commerce on May 23rd, into whether imports of cars and vehicle parts threaten national security, is illustrative.

Other countries like Australia and South Korea have won permanent exemptions to the tariffs because they've agreed to quotas.

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