Fearing trade war, European Union warns of protectionism 'dead end'

That will be hard according to people actually watching the negotiations as Trump's trade team, led by trade czar Robert Lighthizer and commerce chief Wilbur Ross, are asking for things that Canada and Mexico would never give.

"We are ready to take action whenever action is required. we had your backs last week and we always will", Trudeau said after visiting a Rio Tinto Ltd (RIO.AX) (RIO.L) smelter in Alma, Quebec, his first stop on a tour this week of Canada's steel and aluminum regions.

In a comment, the Chinese Commerce Minister said that a trade war with America would only have catastrophic consequences for the world economy. He temporarily exempted big steel producers Canada and Mexico - provided they agree to renegotiate a North American trade deal to his satisfaction.

The EU has been talking with partners about a legal challenge at the World Trade Organization to Mr Trump's plan and is considering safeguards to prevent steel and aluminium, diverted from the United States, flooding into Europe.

Donald Trump has said his commerce secretary will be talking to the European Union about tariffs the USA president argues have been unfair to America.

The EU's top trade official, Cecilia Malmstroem, responded Monday by charging that trade was being used "as a weapon to threaten and intimidate us".

"We're going to hold off the tariff on these two countries to see whether or not we can make a successful deal on NAFTA", he said during a signing ceremony for the two proclamations that will impose the 25 percent tariff on steel imports and 10 percent tariff on aluminum.

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Other trade partners, including Japan and China, have also voiced anger and pledged retaliation if the United States tariffs are enacted as expected on March 23.

Europeans however expressed fears over the costs of escalation, taking the lead from export powerhouse Germany which has urged caution after being singled out by the mercurial Trump.

Over the weekend, the bloc met with U.S. trade representative Robert Lighthizer to resolve the tariff row, but did not come to an agreement.

German chancellor Angela Market also called for the European Union to be exempted from the tariffs.

Malmstroem said talks would continue this week. She said: "The best option would be [for the EU] to be excluded".

"As one example, Americans could pay about one per cent more for an automobile, or just over $300 US".

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  • Michelle Webb