WTO head warns of retaliation risk after U.S. trade tariffs

© Reuters. Roberto Azevedo, Director-General of the World Trade Organization (WTO), gestures during a news conference in Brasilia

BRASILIA (Reuters) – U.S. President Donald Trump’s decision to slap tariffs on imported steel and aluminum could spark retaliation from other countries and lead to unforeseen consequences, the head of the World Trade Organization said on Monday.

“You know when it starts but not how it will turn out” when countries engage in mutual retaliation, WTO Director-General Roberto Azevêdo said in remarks to reporters after a meeting with Brazilian President Michel Temer.

Brazil has said it will seek exemption from the newly imposed tariffs.

“This process of tit-for-tat can induce at times trade wars that are in no one’s interests,” Azevêdo said. He called for a multilateral approach rather than multiple bilateral actions.

Trump last week said he would impose tariffs of 25 percent on steel and 10 percent on aluminum, sending countries scrambling to negotiate exemptions or consider retaliatory measures. Trump said that Canada and Mexico would be exempt from the 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.

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