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U.S. Trade Partners Threatening Retaliation If Proposed Tariffs Go Through


If the Trump administration starts a trade war, Kentucky bourbon may get caught in the crossfire. The administration is weighing strict new limits on imported steel and aluminum in hopes of shoring up homegrown metal industries. But if the White House follows through on that threat, America's trading partners have promised to fight back with protectionist measures of their own. And bourbon is one of their targets, as NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: America's steel and aluminum producers have been taking a beating as a result of cheap imports. Employment in the aluminum industry fell nearly 60 percent in just three years. President Trump is now considering measures to limit imports of steel and aluminum under a seldom-used statute designed to prop up domestic industries deemed vital to America's national security.


PRESIDENT DONALD TRUMP: We cannot be without a steel industry. We cannot be without an aluminum industry. And so what we're talking about is tariffs and/or quotas.

HORSLEY: The Commerce Department has recommended tariffs of at least 24 percent on imported steel or a quota that would reduce imports by more than a third. American steelmakers and the steelworkers union applaud the idea. But Republican Senator Pat Toomey, who represents the steel-rich state of Pennsylvania, is not so sure.


PAT TOOMEY: I would just urge us to go very, very cautiously here. Invoking national security when I think it's really hard to make that case invites retaliation that'll be problematic for us.

HORSLEY: That retaliation could be aimed at American-made products like bourbon. At around a billion dollars a year, bourbon is just a drop in the barrel of overall U.S. exports. But it's big business in Kentucky, home to Senate Republican leader Mitch McConnell.

RUFUS YERXA: That's what a lot of countries will look to do, is how can they do something that will get the Trump administration's attention?

HORSLEY: Rufus Yerxa, who heads the National Foreign Trade Council, says while the administration's steel and aluminum proposal is primarily aimed at overproduction in China, other countries would quickly be drawn into the battle.

YERXA: So the more likely impact would be on our European allies, Canada and Mexico, Latin America, even other Asian suppliers like Korea. Those are all countries with whom we have very good trade relations and a lot of U.S. exports.

HORSLEY: And bourbon's not the only export product that might suffer. Cheese from House Speaker Paul Ryan's home state of Wisconsin could also be on the cutting board. And orange juice from Florida, a swing state that Trump carried, could also feel the squeeze.

YERXA: One of the things this whole era of increasing trade friction has shown us is that our trading partners are learning a lot more about our electoral college.

HORSLEY: That's all part of the political and economic calculation as the president tries to decide whether to risk firing what could be the opening shot in a trade war. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.