Five things to watch in Trump's evolving trade war

Five things to watch in Trump's evolving trade war
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President TrumpDonald John TrumpMcCabe says he was fired because he 'opened a case against' Trump McCabe: Trump said 'I don't care, I believe Putin' when confronted with US intel on North Korea McCabe: Trump talked to me about his election victory during 'bizarre' job interview MORE’s trade war is quickly evolving.

What started as a dispute over steel and aluminum tariffs expanded rapidly as countries hit by tariffs retaliated with tit-for-tat measures.


Trump has already put into place additional tariffs against China over alleged theft of U.S. intellectual property. Last week, he rattled businesses and markets again by floating an additional $200 billion in tariffs on China.

He also has raised the prospect of putting tariffs on auto imports.

Allies and adversaries, though, have already retaliated and are planning an even larger wave of tariffs in response.

The trade moves have set key relationships on edge and left lawmakers and businesses wondering if events are spiraling out of control.

Here are five things to know about the state of Trump’s rapidly evolving trade war.

NAFTA talks are stalled

Formal talks between the United States, Canada and Mexico on renegotiating the North American Free Trade Agreement (NAFTA) have stalled for the moment.

Negotiators worked furiously through the spring to deliver an agreement that Congress could possibly ratify this year but failed to reach a deal.

The tariffs — and a public and personal rift between Trump and Canadian Prime Minister Justin Trudeau after the Group of Seven summit in Canada — are threatening to imperil a deal that all three nations insist it wants.

U.S. lawmakers are pressing negotiators and publicly expressing hopes that a deal can be reached.

House Ways and Means Committee Chairman Kevin BradyKevin Patrick BradyKey author of GOP tax law joins Ernst and Young Lawmakers beat lobbyists at charity hockey game Democrats step up work to get Trump tax returns MORE (R-Texas) said last week that he hopes the three trading partners can finish an updated deal by year’s end.

“I think that’s important, needs to be done this year,” Brady said. “That’s when Congress wants to see it done and it needs to be done right.”

But for now, negotiators see little reason for optimism.

The trade ministers are continuing to talk behind the scenes, but the negotiations are likely to sit on the back burner until after Mexico’s presidential election on Sunday.

China faces another round of US tariffs on July 6

Trump has hit countries with tariffs in a dizzying number of actions.

The next big date will be July 6, when tariffs on Chinese tech imports begin to take effect.

Trump will impose a 25 percent tariff on $50 billion in Chinese goods to punish what he argues are a raft of unfair trade practices, including intellectual property theft. The first round of those duties, worth $34 billion, go into effect on July 6. The second batch, valued at $16 billion, is undergoing further review.

The July 6 tariffs could trigger a new stage in the U.S.-China fight.

China has quickly responded with its own tariffs on $50 billion in U.S. goods, the first batch of which will also going into effect on that date.

Last week, in response to China’s retaliation, Trump asked U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerTrump says no discussion of extending deadline in Chinese trade talks McConnell urges GOP senators to call Trump about tariffs Companies brace for trade war MORE to find another $200 billion worth of Chinese goods that would be hit with a 10 percent import tax.

On top of that, Trump has said that an additional $200 billion in tariffs on Chinese products — or a total of $400 billion — could be in play if China matches the U.S. tariffs.

Trade officials with United States and China have been in on-and-off talks on how to solve their trade disagreements but have yet to reach a deal with July 6 rapidly approaching.

Both sides have little time to avoid a sharp escalation.

Auto tariffs are Trump’s next target

In late May, Trump asked the Commerce Department to investigate whether the U.S. needs to impose 25 percent tariffs on foreign cars for national security reasons.

Trump wants to employ Section 232 — the same trade law used to slap hefty tariffs on imported steel and aluminum — to hit foreign automakers.

The move would lead to a dramatic boost in tariffs to 25 percent from 2.5 percent. The U.S. already charges a 25 percent tariff on light-truck imports.

Last week, Trump separately threatened to impose a 20 percent tariff on imports of cars from the European Union, furthering angering trans-Atlantic allies.

“If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump tweeted.

Trump has criticized the EU for charging a 10 percent tariffs on U.S. cars exported there.

Europe again is vowing to retaliate.

“If they decide to raise their import tariffs, we’ll have no choice, again, but to react,” said European Commission Vice President Jyrki Katainen, according to reports.

While the Commerce Department has until February to investigate whether imported cars threaten national security, there is a possibility that a report could be ready by the end of the summer.

But Trump could also have another fight on his hands at home. The idea has already gotten a cold reception from Republicans on Capitol Hill and U.S. businesses.

The US is about to be hit by a wave of retaliatory tariffs

Canada, Mexico, China and the EU already have tariffs in place to hit back over Trump’s steel and aluminum duties.

But another slew of retaliatory tariffs is on its way.

Canada will hit the U.S. with a broad range of tariffs on $12.8 billion of U.S. products on Sunday, which also marks the country’s national holiday Canada Day.

The EU on Friday began imposing tariffs on about $3.2 billion of U.S. products, ranging from Harley-Davidson motorcycles to jeans, bourbon and agricultural products.

The EU is planning another possible batch of tariffs on $3.8 billion worth of goods. 

In early June, Mexico imposed tariffs on $3 billion in U.S. exports, including pork, apples, potatoes, bourbon and cheese.

Several other countries — Japan, India, Turkey and Russia — are planning to retaliate or have already added new tariffs.

China is also preparing a punch in response to Trump’s upcoming tariffs on their tech exports.

China intends to hit about $45 billion in U.S. exports.

The first round of 25 percent tariffs on $29.6 billion of U.S. exports is expected to start July 6. Beijing will move on the remaining $15.4 billion at a later time, after gauging the U.S. reaction.

U.S. farmers are taking the brunt of the hit from China, with nearly $17 billion aimed at exports of soybeans, sorghum and meats.

China also plans to slap tariffs on U.S. oil, plastics, chemicals and medical equipment.

In total, John Murphy, the U.S. Chamber of Commerce’s vice president of international affairs, has said that about $75 billion of U.S. exports will be hit with retaliatory tariffs in the first week of July.

Trump’s tariffs have incensed Republicans on Capitol Hill

Last week, Republicans on the Senate Finance Committee raked Commerce Secretary Wilbur RossWilbur Louis RossSupreme Court to hear census citizenship case this term Hillicon Valley: Lawmakers press officials on 2020 election security | T-Mobile, Sprint execs defend merger before Congress | Officials charge alleged Iranian spy | Senate panel kicks off talks on data security bill Apple, IBM, Walmart join White House advisory board MORE over the coals for the administration’s trade moves.

Lawmakers on the panel are floating the idea of narrowing the scope of the Section 232 law that Trump has been using to target imports he says endanger national security.

But it’s unclear if Trump’s opponents on trade have the political muscle to pass legislation reining him in.

A measure from Sen. Bob CorkerRobert (Bob) Phillips CorkerSasse’s jabs at Trump spark talk of primary challenger RNC votes to give Trump 'undivided support' ahead of 2020 Sen. Risch has unique chance to guide Trump on foreign policy MORE (R-Tenn.) to give Congress more oversight over trade fell short earlier this month.

Sen. Pat ToomeyPatrick (Pat) Joseph ToomeyOvernight Defense: Pick for South Korean envoy splits with Trump on nuclear threat | McCain blasts move to suspend Korean military exercises | White House defends Trump salute of North Korean general WH backpedals on Trump's 'due process' remark on guns Top GOP candidate drops out of Ohio Senate race MORE (R-Pa.) has called the moves against allied trading partners “a wholly inappropriate use of tariffs,” and Corker expressed optimism that his bill could find new momentum if the trade situation worsens.

Monday saw the Dow Jones industrial average drop more than 300 points over trade worries. And an iconic American company, Harley-Davidson, said it would move some its production offshore, citing EU tariffs.