Canadian, US leaders discuss North American trade

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Even as President Donald TrumpDonald John TrumpAccuser says Trump should be afraid of the truth Woman behind pro-Trump Facebook page denies being influenced by Russians Shulkin says he has White House approval to root out "subversion" at VA MORE directs his staff to finalize the plans for his proposed tariffs on aluminum and steel, there are those who say this isn't about tariffs at all.

If President Trump's Section 232 tariffs follow the same path that President Bush's Section 201 tariffs did, the new tariffs regime could end up gutted, and reduced to "a watered-down talking point" - useful on campaign stumps, but of little use in boosting US steelmakers' profits. The number one tactic he employed was to think big.

But he also says they will revive America's "dead" metal industries, punish Chinese overproduction and reduce the US's massive trade deficit with Beijing. The U.S. Office of the Trade Representative has accused China of infringing on U.S. intellectual property rights, including the widespread counterfeiting of goods.

Trump last week said he would impose tariffs of 25 percent on steel and 10 percent on aluminum, sending countries scrambling to negotiate exemptions or consider retaliatory measures.

The U.S. has been intensifying trade protectionism since a year ago.

Right now China isn't even among the top 10 producers of US steel imports. Barclays Plc has estimated as much as a 0.2 percentage point impact.

Trump has repeatedly accused administrations of making "bad deals" on trade due to "incompetence". Most economists see losses to all sides.

Dutch Finance Minister Wopke Hoekstra said the tariffs are "a bad idea".

In Asia, a large share of Japanese and Chinese steel goes to countries in the region's southeast, where booming construction and light industries are fueling strong demand for steel. The U.S., Canada, and Mexico wrapped up their seventh round of negotiations early this month.

But every sector of the USA economy that uses steel or aluminum would suffer from higher prices.

Eighty percent of the economists predicted a small increase in inflation from the trade policy, while the remainder saw no effect. Those slabs must be imported from Brazil, Mexico and Japan because they aren't available available locally and it's cheaper to import them from overseas than from the East Coast, Rodrigues said.

But Canada has been taking a hard line against Trump in disputes regarding Canadian lumber exports and USA dairy exports. They're nearly certainly the reason that shares of U.S. Steel (NYSE: X) are up 15% over the last 30 days, why AK Steel stock has gained 10%, and probably explain why Alcoa has notched a 6% jump as well - but not everyone is impressed.

"We expect the impact on USA growth and inflation to be fairly limited", said Mikael Olai Milhoj, a senior analyst at Danske Bank in Copenhagen. "Are there things that we can be doing?"

A full-blown trade war could cost the global economy $470 billion, an analysis by Bloomberg Economics found. That is the case with the uneven tariff situation with other nations, and quite a few of them are our allies.

What happens to global growth if there's a trade war?

Housing trade groups also took a dim view of the tariffs, saying the policy would raise costs and slow building at a time when the nation faces a severe shortage in homes and rental housing. To put that into perspective, that's about $470 billion - roughly the size of Thailand's output. "But we are kind of collateral damage".

J. Bradford Jensen, a professor of worldwide business at Georgetown University's McDonough School of Business, told us that "imports did have something to do with the loss of employment in steel and aluminum, but the more important factor is technological change and productivity growth".

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