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(EDITORIAL from Korea Times on March 3)

All Headlines 09:20 March 03, 2018

Specter of trade war
: :US tariffs will do more harm than good

Fears of an escalating trade war are growing after U.S. President Donald Trump announced Thursday he would impose 25 percent and 10 percent tariffs on imported steel and aluminum, respectively. The rationale for the protectionist move is to protect U.S. producers and bring jobs back to the U.S.

President Trump should realize that the tariffs will do more harm than good not only to the U.S., but the world. The punitive tariffs may help protect the U.S. steel industry, but they will inevitably drive steel prices up so consumers will have to shoulder the burden of higher costs. It is feared the impact will hit a wide range of industries from automobiles to oil and gas.

In a word, Trump's decision can never be a win-win strategy. There will certainly be far more losers than winners. What is more worrisome is the planned tariffs will destroy the long-established global trade order. The U.S. move will also pose a serious threat to free trade, which the World Trade Organization (WTO) has championed.

Furthermore, Trump's narrow-minded, self-serving restrictive measure is raising the specter of a trade war. Immediately after the U.S. President revealed the tariffs plan, several countries threatened to take retaliatory action to protect their trade interests. One of them was Canada, whose aluminum and steel account for 43 percent and 17 percent of U.S. imports, respectively.

Canadian Foreign Minister Chrystia Freeland said Ottawa would retaliate against the U.S., calling any trade restrictions "absolutely unacceptable." European Commission President Jean-Claude Juncker also said the EU would retaliate if Trump turned his plan into practice.

China has already threatened to restrict imports of U.S. soybeans, although the country accounts for just 2 percent of U.S. steel imports. Despite the low proportion, Trump may target China because he has blamed the Asian giant for unfair trade practices.

South Korea, the third-largest steel exporter to the U.S. after Canada and Brazil, avoided the worst-case scenario of being slapped with tariffs of up to 50 percent on its steel exports to the U.S. But the 25 percent duties will still be painful. Domestic steel mills have already suffered from anti-dumping and countervailing duties imposed on their products by the U.S. Korea's steel exports to America dived 38 percent to $3.25 billion last year from $5.2 billion in 2014.

The problem now is how to cope with the surging wave of U.S. trade protectionism. The Trump administration has already imposed high safeguard tariffs on Korean-made washing machines as well as solar cells and modules. Korean policymakers and businesspeople are worried that America might expand its restrictive policy to automobiles and semiconductors.

The Moon Jae-in administration should step up cooperation with other countries and global trade organizations in fighting against the U.S. protectionist move. It is time to strengthen trade diplomacy to defend the country's trade interests. Korean firms also must diversify their export markets to avoid the fallout from the intensifying trade war.
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