US President Donald Trump’s decision to slap tariffs on imported steel and aluminum could spark retaliation from other countries and lead to unforeseen consequences, World Trade Organization (WTO) Director-General Roberto Azevedo said on Monday.
Azevedo, who was in Brazil to attend the upcoming World Economic Forum for Latin America, said: "this escalation, which I say has a domino effect, is an escalation that is tough to reverse.
"Once you enter the path of reciprocal reprisals, you know when it begins, you know how it begins, but you don't know how or when you will be able to stop the process," Azevedo told reporters after a meeting with Brazilian President Michel Temer.
The Brazilian-born WTO chief met with Temer in Brasilia to discuss the US decision to slap steep tariffs on imported steel and aluminum. Trump last week formally signed proclamations to impose a 25-percent tariff on imported steel and a 10-percent tariff on aluminum, causing mounting dissent among business groups and trading partners around the world. He added that Canada and Mexico would be exempt from the tariffs.
Brazil, the second-largest exporter of steel to the United States, joined the protest against the protectionist measure. "Unilateral" announcements like those made by Trump tend to spark countermeasures, said Azevedo.
"This process of action and reaction lead, sometimes, to trade wars that are not in anyone's interest, where there are only losers, since there are no winners in a trade war," he warned, calling for a multilateral approach rather than multiple bilateral actions.
Brazil has said it will seek exemption from the newly imposed tariffs.
The United States has been in prolonged negotiations with Canada and Mexico in efforts to revise the North American Free Trade Agreement.
Azevêdo said Brazil was “exploring alternatives” for responding to the tariffs. Brazil, which is the second biggest supplier of steel to the United States after Canada, remains open for a dialogue to reach an understanding with the United States and is talking to other countries to learn about measures they are considering, he said.
Azevêdo said he did not know if Brazil would resort to the WTO’s dispute resolution mechanism but said Brazil was not ruling it out.
Earlier on Monday, Finance Minister Henrique Mereilles said Brazil’s government had not made a decision yet on how to respond to the tariffs and needed to see what exactly the United States wanted in negotiations.
The WTO, launched in 1995, has a mission to facilitate free and fair trade through the establishment of rules, settling of disputes, and getting countries to talk to work out their differences.
Officials at the trade body say it's too early to tell whether the United States is violating the organization's rules, mainly because it hasn't received a formal filing. Countries that allege the US is acting unfairly can use WTO councils, committees and its dispute settlement system -- which essentially rules on trade squabbles -- to seek and obtain redress.
Trump is justifying his moves, at least officially, on grounds of national security. WTO rules allow a country to set tariffs for national security reasons, though it has so far never ruled on a case when that exception was invoked.
Trump argues the United States needs robust steel and aluminum industries to reinforce domestic production of warships, fighter planes and other national defense requirements. The European Union counters that the US move is more about protecting US companies, not national security.
