President Donald Trump on Friday declared "trade wars are good, and easy to win," a bold claim that will likely find many skeptics, including those on Wall Street and even some Republicans.
Trump has declared that the U.S. will impose steep tariffs on steel and aluminum imports, escalating tensions with China and other trading partners and raising the prospect of higher prices for American consumers and companies. With tensions rising over international trade, stocks closed sharply lower on Wall Street. China on Friday expressed "grave concern."
Trump insisted the move was necessary on Twitter, saying: "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. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!"
He also addressed the need to protect the U.S. steel industry.
"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!" he tweeted.
Trump said firm action was crucial to protect U.S. industry from unfair competition and to bolster national security. However, his announcement came only after an intense internal White House debate. It brought harsh criticism from some Republicans and roiled financial markets with concerns about economic ramifications.
Trump's decision to engage in what could become a trade war was born out of anger at other issues — Hope Hicks' testimony to lawmakers probing Russia's interference in the 2016 election, how Attorney General Jeff Sessions has acted and how chief of staff John Kelly treated his son-in-law, Jared Kushner — and came about because of a broken internal process, two officials told NBC News.
They said he was gunning for a fight and chose a trade war after being spurred on by Commerce Secretary Wilbur Ross and White House director for trade Peter Navarro. One said he became "unglued" Wednesday evening, according to one of the officials.
Other White House officials pushed back on the account. One told NBC News that the communications team "was well-prepared to support the president's announcement" and another said of the decision, "everyone in the world has known where the president's head was on this issue since the beginning of his administration."
China has threatened to retaliate if Trump raised trade barriers, but Chinese leaders need to decide whether his planned hikes in steel and aluminum tariffs justify starting a fight that might disrupt access to one of China's biggest markets.
Asian stock markets fell amid talk of a trade war, and before Trump tweeted that such conflict was good. The Dow Jones industrial average fell more than 350 points, or 1.5 percent, Friday morning. It recovered about 200 points by the afternoon.
On Friday, White House press secretary Sarah Huckabee Sanders told reporters that Trump wasn't concerned about the market declining, saying that the "president is still focused on long term economic fundamentals."
Sen. Ben Sasse, a Nebraska Republican responded to Trump's trade remark by saying that trade wars are never won.
"Kooky 18th century protectionism will jack up prices on American families -- and will prompt retaliation from other countries," he wrote in a statement. "Make no mistake: If the President goes through with this, it will kill American jobs -- that's what every trade war ultimately does. So much losing."
Sen. John McCain, R-Ariz., tweeted, "The President’s sweeping tariffs will only serve to hurt American workers and consumers, and alienate us from our most important allies and trading partners."
Overseas, Trump's words brought a stinging rebuke from the president of the European Commission, Jean-Claude Juncker, who denounced his plan as "a blatant intervention to protect U.S. domestic industry." Juncker said the EU would take retaliatory action if Trump followed through.
While not immediately offering a specific response on what it would do, the Chinese Commerce Ministry statement said: "The Chinese side expresses grave concern." The ministry said Beijing has satisfied its trade obligations and appealed to Washington to settle disputes through negotiation.
Beijing faces mounting complaints from Washington, Europe and other trading partners that it improperly subsidizes exports and hampers access to its markets in violation of its free-trade commitments.
Chinese leaders need to weigh the need to back up threats with action against the risk of disrupting U.S. market access for smartphones and other exports that matter more to the economy than metals.
"China will definitely respond. It doesn't want to be seen as weak. But it will be relatively restrained," said economist Louis Kuijs of Oxford Economics. "They don't want to be seen as a party that is wrecking the international trading system."
Beijing has accused Trump of undermining global trade regulation by taking action over steel, technology policy and other disputes under U.S. law instead of through the World Trade Organization.
Chinese officials have appealed to the White House since last March to avoid hurting both sides by disrupting aluminum trade. Their tone hardened after Trump launched a probe in August of whether Beijing improperly pressures companies to hand over technology and in January raised duties on Chinese solar modules and washing machines.
Japan and South Korea, both U.S. allies and major exporters of steel and aluminum, said they would ask for exemptions from the tariff hike, which Trump justified in part on national security grounds.
"We don't think imports from Japan, an ally, have any effect at all on U.S. national security," said Japan's trade and industry minister, Hiroshige Seko, at a news conference.
A South Korean trade envoy, Kim Hyun-chong, met with Trump's chief economic adviser, Gary Cohn, and Commerce Secretary Wilbur Ross to "strongly demand" they keep the impact on South Korean companies to a minimum, according to a trade ministry statement.
Canada, the largest source of steel and aluminum imports in the U.S., said it would "take responsive measures" to defend its trade interests and workers if restrictions were imposed on Canadian steel and aluminum products.
Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers."