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China says Trump’s trade war ‘will only bring disaster’ to the world

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Any trade war with the United States will only bring disaster to the world economy, Chinese Commerce Minister Zhong Shan has said, as the European Union and Japan call for exemptions from metal tariffs.

Key points:

  • Donald Trump's announcement will impose a 25 per cent tariff on steel and 10 per cent on aluminium imports
  • Australia, Mexico and Canada have been granted exemptions
  • China says it will "resolutely defend" its interests if the move results in a trade war

The comments came a week after US President Donald Trump announced heavy trade tariffs of 25 per cent for steel and 10 per cent for aluminium.

The European Union and Japan urged the US to grant them exemptions from metal import tariffs, with Tokyo calling for "calm-headed behaviour".

Mr Trump said on Saturday the US was "working very quickly on a security agreement" so as not to impose the tariffs on "our ally, the great nation of Australia".

Prime Minister Malcolm Turnbull confirmed Australia will be exempt but denied the announcement was the result of a new security agreement, instead saying Mr Trump was referring to the legal paperwork to cement the deal.

The President has also given Canada and Mexico a reprieve, exempting them from the tax temporarily provided that they agree to renegotiate the North American Free Trade Agreement to Mr Trump's liking.

But China — largely blamed for global glut of steel and criticised by Mr Trump for exploiting a trade deficit — looks likely to bear the brunt of the move.

"There are no winners in a trade war, and it would bring disaster to our two countries as well as the rest of the world," Commerce Minister Zhong said.

"China does not wish to fight a trade war, nor will China initiate a trade war, but we can handle any challenge and will resolutely defend the interests of our country and our people," he said.

It was Beijing's latest statement on "problems in Sino-US economic trade and cooperation," alluding to Mr Trump's plan.

In an earlier statement, Wang Hejun, a ministry official, warned that the tariffs "will surely have a serious impact on the normal international order".

Chinese leaders have threatened in the past to retaliate against raised trade barriers, but have yet to take direct action following the announcement.

Trump doubles down on criticism

The European Commission, which coordinates trade policy for the 28-nation EU, the world's biggest trading bloc, has said it is ready to impose safeguards, tariffs or quotas to protect its own steel and aluminium industries.

It has already started monitoring incoming metal flows to see whether a surge occurs.

Trade deficit reality starts to bite for Trump

Commission Vice President Jyrki Katainen warned Washington not to expect any concessions to win an exemption.

"This is not a trade negotiation," he said.

"We are talking about unilateral action against international rules."

Responding to calls for exemptions, Mr Trump said the "wonderful countries" of the EU "treat the US very badly on trade".

"If they drop their horrific barriers and tariffs on US products going in, we will likewise drop ours," he tweeted.

External Link: Tweet by Donald Trump: "The European Union, wonderful countries who treat the U.S. very badly on trade, are complaining about the tariffs on Steel & Aluminum."

The EU is also maintaining a threat of counter-measures that would target US imports ranging from maize to motorcycles, and may publish its list next week to allow industry and other interested parties to give their input.

Under World Trade Organisation rules, such counter-measures have to be in place within 90 days of the US tariffs entering force.

After meetings with US trade envoy Robert Lighthizer in Brussels, EU and Japanese trade officials said negotiations would need to continue.

Japanese Trade Minister Hiroshige Seko said he had expressed concern to Mr Lighthizer and warned of major market disruption.

"We call for calm-headed behaviour," he told reporters.

Any Japanese response, he said, would be in line with World Trade Organisation rules: "If there is a violation, then we will seek consultations."

ABC/wires

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