Trump’s Global Trade War Is Back On. For Now.

US President Donald Trump arrives outside the White House on the South Lawn before he delivers remarks and participates in the White House Sports and Fitness Day on May 30, 2018 in Washington,DC. (Photo by Nicholas Kamm / AFP)        (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)
Game on!

After putting its threats on hold for the past two months, the Trump administration is finally preparing to slap tariffs on steel and aluminum from the European Union, Mexico, and Canada this week, according to multiple reports. A source tells CNBC that the decision is “99.9 percent done,” and should be announced Thursday morning.

The president first said that he would impose tariffs on imported metals back in March, but quickly softened his stance by granting many of America’s major trade partners temporary reprieves so they could negotiate individual settlements. Trump has since tried to use the looming threat of tariffs to make Canada and Mexico accept changes to the North American Free Trade Agreement and force the EU to limit its metal sales in the U.S., among other demands. But those efforts have stalled. And with the temporary exemptions set to expire Friday, the administration has decided to set the tariffs in place.

In general, the president seems to be embracing his more berserk and protectionist impulses on trade policy this month. Last week, the administration made a 180 and said it had decided to set tariffs on $50 billion worth of Chinese goods. This move came just one week after Treasury Secretary Steve Mnuchin said that the White House was putting its trade war with Beijing “on hold.” Meanwhile, Trump ordered the Commerce Department to investigate whether auto imports pose a threat to U.S. national security, which could set the stage for tariffs on foreign cars and trucks that would hit Germany, Mexico, and Canada especially hard.

How will our allies react? Despite Trump’s lashing out, the Washington Post suggests that Canada and Mexico will likely continue negotiating over NAFTA—though the government in Ottawa may retaliate with some duties of its own (Canada is a major exporter of steel to the U.S.). The situation in Europe, however, is a bit more complicated. As the New York Times notes, the EU has already offered a deal to the U.S. that would hand Trump a number of wins. Among other things, it would zero out auto tariffs on both sides of the Atlantic (Europe’s taxes on foreign cars are one of our president’s pet peeves), while having the trade bloc buy more U.S. natural gas, and commit Europe to lobbying for rule changes at the World Trade Organization. But the EU has refused to bargain over its metal exports without first being granted a permanent exemption from the steel and aluminum tariffs Trump is now implementing, because it does not want to “negotiate under threat.” During a forum in Paris on Wednesday, a Dutch trade minister complained that “dialogue with the U.S. remains primordial.”

At the same event, Commerce Secretary Wilbur Ross blamed the EU for refusing to bargain and pointed out that tariffs hadn’t stopped China from talking over trade issues. “China hasn’t used that as an excuse not to negotiate,” he said. “It’s only the EU that is insisting we can’t negotiate if there are tariffs.” So that’s where we are on that.

For now, it’s probably best not to get too caught up in the thicket of these issues. The big picture is that, for a moment, it seemed that trade friendly officials in the White House, like Mnuchin, had wrestled back the administration’s agenda. Now, protectionists like U.S. Trade Rep. Robert Lighthizer and trade adviser Peter Navarro seem to be back in command. After a brief hesitation, Trump’s global trade war appears to be on. At least for now.

Update, 10:23 AM: And now it’s official. Ross told reporters Thursday that the tariffs—25 percent on steel and 10 percent on aluminum—will go into effect at midnight.