TRUMP: 'Trade wars are good'

  • President Donald Trump said trade wars are “good, and easy to win” in a tweet Friday morning.
  • The declaration comes the day after the president announced new tariffs on steel and aluminium imports.

President Donald Trump appeared to welcome the possibility of a trade war in a tweet Friday morning, the day after announcing huge tariffs on steel and aluminium are coming.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said. “Example, when we are down $US100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”

In an unexpected announcement during a meeting of US steel and aluminium executives Thursday, Trump said steel imports will be subject to a 25% tariff, which functions like a tax on imports, while aluminium will face a 10% tariff. The decision led to other nations, including allies like Canada and the European Union, to warn of retaliatory measures.

US stocks fell sharply after the opening bell, with the Dow Jones falling more than 300 points.

“We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” Trump tweeted later Friday morning.

“When a country Taxes our products coming in at, say, 50%, and we Tax the same product coming into our country at ZERO, not fair or smart,” he said. “We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us.”

Trump’s move raised the spectre of a trade war, in which the US and other countries increase protectionist measures back and forth. Economists say such a fight would ultimately increase prices for US consumers and possibly lead to a broad economic slowdown.

“Extremely concerning stance,” Paul Mortimer-Lee, chief US economist for BNP Paribas, said in response to Trump’s tweet. “History suggests trade wars lead to everyone losing.”

Ian Shepherdson, chief economist at Pantheon Macroeconomics, tweeted a joking reply to Trump’s first tweet Friday morning.

“Looks like someone with zero understanding of basic economics has got access to the US President’s Twitter this morning,” Shepherdson said. “He probably should change his password.”

Additionally, many experts say the steel and aluminium tariffs may just be the start of Trump’s crackdown on trade since the president promised serious action during the campaign.

“While we are still far from a global trade war, we continue to stress that the US administration is likely to continue to pull on the protectionist lever in 2018 – feeling emboldened by the recent passage of the Tax Cuts and Jobs Act and Bipartisan Budget Act,” Gregory Daco, chief US economist at Oxford Economics, said in a note Thursday.

There are a number of monumental policy moves on trade Trump could make in the near future, including starting the process of pulling the US out of the North American Free Trade Agreement (NAFTA) and imposing restrictions on the export of intellectual property to China.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.