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All out trade war looks real as US plays hardball

In the game of tit-for-tat, no one would win.

On Thursday, when the United States President Donald Trump announced tariffs on steel and aluminium imports from key allies in Europe, North America and on Mexico, a senator from Nebraska Ben Sasse wrote on Twitter: "You don't treat allies the same way you treat opponents." The tweet rightly captures the spirit of global trade, yet the essence of the message is seemingly lost on Trump, who has been pursuing protectionist policies to defend his stance of making America great again. With the murmuring and talk of trade war, Trump has kept his opponents and allies on tenterhooks all of this year. First, the administration targeted China, and now it has turned to America's long-standing allies. What's ironic is that taxing steel and aluminium imports will make US manufacturers less competitive.
Americans already fork out more for their metal than most people elsewhere. The move is likely to adversely impact the consumers, pushing the prices of products higher that use steel and aluminium. And the impact could be felt across the board as imported steel and aluminium is used for manufacturing a wide range of things - from cars, washing machines, cans, to wrappers of popular American chocolates and more.
Canada provides 43 per cent of US aluminium imports. Mexico and Canada together cater to a fifth of the steel needs of the US industries. Europe is not a small a player either. The European Union provides 17 per cent of the steel imported by the US, and is a major supplier of stainless steel, high-value steel used by the automotive industry. Naturally, it has retaliated with tariffs of up to 50 per cent on $3.3 billion of US products including motorboats, playing cards, cranberries, etc. Canada and Mexico, too, have announced a list of American products that would face higher tariffs.
In the game of tit-for-tat, no one would win. This strategy for trade is opposite of trade agreements and everything the rule-based system stands for. In an attempt to wrong-foot its trading partners, America is already incurring economic damage and eroding its authority in international policymaking. It is the biggest act of protectionism yet, and with this the Trump administration has raised the prospect of a global trade war.