Trump signs sweeping tariffs, defying trade war warnings

US President Donald Trump, with Defence Secretary James Mattis (right), speaks during a Cabinet meeting in the Cabinet Room of the White House in Washington, DC. (Mandel NGAN/AFP)

US President Donald Trump slapped steep trade tariffs on foreign steel and aluminium on Thursday (Mar 8), drawing sharp protests from allies at home and abroad as the contentious move raised the specter of a global trade war.

Signalling a sharp departure from a decades-long US-led drive for more open and less regulated trade, Trump declared that America had been "ravaged by aggressive foreign trade practices."

"It's really an assault on our country," he said, in announcing the tariffs of 25 per cent on imported steel and 10 per cent on aluminium.

Trump said the tariffs - which will come into effect after 15 days - will not initially apply to Canada and Mexico, and that close partners on security and trade could negotiate exemptions.

"Many of the countries that treat us the worst on trade and on the military are our allies, as they call them," he complained.

The tariffs, worth billions of dollars, sparked immediate protests from top trading partners the European Union and Brazil, with retaliatory action expected from China and other economic powers.

Leaning on a little-used and decades-old national security clause in US trade law, Trump said he was fulfilling a campaign promise.

"I've been talking about this a long time, a lot longer than my political career," he said. "We've been treated very badly by our past administrations, by presidents that represented us that didn't know what they were doing."

The mercurial 45th president compared his action to those of predecessors George Washington, Abraham Lincoln and William McKinley.

'REAL FRIENDS'

Canada, America's neighbour to the north, was its single-largest source of steel last year, followed by Brazil, South Korea, Russia, Mexico, Japan and Germany.

Regarding alumina and aluminium, Canada was also by far the largest supplier followed by China, Russia and the United Arab Emirates.

Trump had indicated he would be flexible toward "real friends," and during the signing confirmed that Canada and Mexico would be permanently exempted if the ongoing renegotiation of the North American Free Trade Agreement is successful.

The US leader had also added Australia to a list of likely carve-outs, as a "great country" and "long term partner."

But he singled out Germany for criticism, reviving a longstanding gripe that European NATO allies do not pay their fair share.

"We have some friends and some enemies where we have been tremendously taken advantage of over the years on trade and on military," he said.

"If you look at NATO, where Germany pays one per cent and we are paying 4.2 per cent of a much bigger GDP - that's not fair."

The EU's top trade official Cecilia Malmstroem insisted the entire bloc "should be excluded" from the tariffs as a "close ally," vowing to "seek more clarity" from Washington.

Britain meanwhile said it would "work with EU partners to consider the scope for exemptions outlined today," saying "tariffs are not the right way" to tackle the problem of global over-capacity in steel.

Major producer Brazil immediately vowed to take "all necessary steps" in order to "protect its rights and interests" in response to the US move.

China had also warned it was ready to respond - although Trump struck a more conciliatory tone in his announcement, pointing to negotiations under way to trim Washington's soaring bilateral trade deficit with Beijing.

PARTNERS PROMISE BACKLASH

Last week Trump stunned the world - and his own aides - with an off-the-cuff announcement of his plan, even before White House lawyers judged the legality of the tariffs.

The metals are used in everything from cars to construction, roads to railways.

While the full economic impact remains unknown, the political fallout was swift with the top Republican in Congress Paul Ryan publicly denouncing Trump's move, and vowing to push him to narrow its focus to "countries and practices that violate trade law."

"I disagree with this action and fear its unintended consequences," the speaker of the House said in a statement, vowing to push the administration to narrow the policy's focus to "those countries and practices that violate trade law."

More than 100 Republican lawmakers had written to Trump expressing "deep concern" about the policy, which threatens to sour already vinegared trans-Atlantic relations.

The European Union has promised tariffs on items from steel to peanut butter, bourbon and denim - most of which are produced in states that Trump needs to win re-election.

"Trade wars are bad and easy to lose," EU President Donald Tusk warned, rejecting Trump's assertion they were "good and easy to win".

Data released on Wednesday showed the US foreign trade deficit widened in January to its highest level in nine years - a trend Trump had promised to reverse.

Even as Trump approved the tariffs, 11 partners in the Asia-Pacific were in Santiago, Chile, to sign a multilateral trade deal embraced by president Barack Obama but rejected by Trump.

China meanwhile warned it was ready to respond to US tariffs if they materialise.

"Choosing a trade war is surely the wrong prescription, in the end you will only hurt others and yourself," said Foreign Minister Wang Yi.

The White House was left scrambling to catch up following Trump's shock move last week, as top economic advisor Gary Cohn - who opposed it - quit in protest.

"He may be globalist, but I still like him," Trump joked earlier on Thursday, alluding to an ideological clash within his administration that the "nationalists" appear to have decisively won.