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China, Japan warn Trump tariffs will have major impact on trade, ties

China expressed its "resolute" opposition to U.S. President Donald Trump's newly signed orders to impose import tariffs on steel and aluminum, and Japan foresaw a "big" impact on bilateral economic ties, but major steel exporters South Korea and Brazil said they would seek exemptions.

China's commerce ministry called for the U.S. to withdraw the measures as soon as possible, Reuters reported. China will assess any damage resulting from the U.S. move and "firmly defend its legitimate rights and interests," the ministry added, as it said the tariffs would "seriously impact the normal order of international trade."

The China Iron & Steel Association appealed to Beijing to "take resolute measures" against imports from the U.S. such as stainless steel, galvanized sheet, seamless pipe, coal, electronics, agricultural products and electronics products. The China Nonferrous Metals Industry Association made similarly strong comments urging government action.

Japan Foreign Minister Taro Kono said March 9 that the U.S. decision was "regrettable" and will likely have a "big impact" on Japan-U.S. economic relations. He added that Japan would provide an appropriate response after examining any impact on Japanese companies, and World Trade Organization rules, Reuters said.

Trump gave temporary carve-outs to Canada and Mexico and said there is a chance to extend the exemptions on the 25% steel levy and the 10% tariff on aluminum to countries that are "friends of ours" on trade.

'Tit-for-tat' fear

South Korea will seek an exemption for its steel exports, according to its trade minister, although the country would also consider filing a complaint to the WTO. The U.S. accounts for the second-largest share of South Korea's long product steel exports, and the largest share of pipe and tube exports as of December 2017, U.S. Commerce Department data showed.

Brazil, which exported $3 billion of iron ore-based products to the U.S. in 2017 and is the second-biggest steel supplier to the U.S., would seek an exemption, but did not rule out "resorting to any other measure to protect the national interest" of the country if talks fail, acting Trade Minister Marcos Jorge said after meeting U.S. Commerce Secretary Wilbur Ross in Paraguay.

Argentina's foreign ministry said the country will seek to join Mexico and Canada in securing a U.S. tariffs exemption.

Speaking at a Washington Post forum on women's issues March 8, IMF Managing Director Christine Lagarde feared the U.S. tariffs would lead to a "tit-for-tat" retaliation, sapping business confidence and investment. Rather than the tariffs' direct economic impact, their role as a "trigger" for retaliatory responses from trading partners was most concerning, she said.

"It is that escalation that is in and of itself dangerous for the impact that it has on all those economies, and furthermore for the impact that it has on confidence," Lagarde said, noting that trade had been driving the stronger global recovery seen in recent months.

"And confidence is a super-precious good that builds over time and can be destroyed very quickly," Lagarde added, according to Reuters.

"If the perception of investors around the world is that this is uncertain, and you never know where the tariffs are going to go, how high, how low, against whom ... then you step back and you don't invest, you wait and that confidence impact could be significant."