Australia Ex-PM Says Trump Tariffs Make Allies Collateral Damage

(Bloomberg) -- Former Australian Prime Minister Kevin Rudd said America's allies are likely to suffer fallout from the Trump administration's move to impose tariffs on steel and aluminum imports as it tries to target China's vast trade surplus with the U.S.

“Remember on steel, it's not just China that exports to the United States, Korea exports three times as much as China to the U.S., and Turkey does export more as well,” Rudd said Friday in an interview on Bloomberg television. “So American allies are going to fall within the collateral damage which flows from this particular measure.”

A U.S. move on tariffs risks provoking retaliation from China, the world's biggest steel and aluminum producer. China has already launched a probe into U.S. imports of sorghum, and is studying whether to restrict shipments of U.S. soybeans -- targets that could hurt Trump's support in some farming states. While China accounts for just a fraction of U.S. imports of the metals, it's accused of flooding the global market and dragging down prices.

“The feeling I get from those around the official community in Washington and in Beijing, and I speak to both sides, is that this is starting to careen out of control,” Rudd said.

Beef, Boeing

“China has a range of mechanisms available to it by way of retaliation, they could go after American food exports to China, beef exports,” he said. “They could go after Boeing. They could go after lesser things, for example, regulatory complaints being investigated more vigorously against American firms operating within China.”

President Donald Trump said he would impose tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time,” and he expected to sign a formal order next week. The move comes despite lobbying of his administration by foreign governments, and while Chinese President Xi Jinping's top economic adviser is in the country on a mission to defuse tensions.

Xi will likely be caught between “two worlds,” Rudd said. 

Does he “retaliate because there's a political imperative necessary to do so, and emotions are charged” or “try and smooth this through?” he said. “It's a very, very volatile cocktail of emotions and political passions in Beijing as well as of course in Washington. ”

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net.

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Chris Bourke, Peter Vercoe

©2018 Bloomberg L.P.