(Adds White House meeting with Chinese economic adviser, someDemocrats supporting tariffs)
* GRAPHIC-U.S. steel imports: http://tmsnrt.rs/2oPeo1z
* Trump defends planned steel, aluminum tariffs
* European Union promises firm response to U.S. duties
* China urges U.S. restraint, respect of global trade rules
* Stock markets fall on fears of global trade war
By Susan Heavey
WASHINGTON, March 2 (Reuters) - U.S. President Donald Trumpstruck a defiant tone on Friday, saying trade wars were good andeasy to win, after his plan to put tariffs on steel and aluminumimports triggered threats of retaliation from trading partnersand a slide in stock markets.
The European Union raised the possibility of takingcountermeasures, France said the duties would be unacceptable,and China urged Trump to show restraint. Canada, the biggestsupplier of steel and aluminum to the United States, said itwould retaliate if hit by U.S. tariffs. S&P 500 ended another turbulent week on an upbeat noteFriday but major indexes posted their worst week of losses sinceearly February as Trump's threat to impose import tariffs onsteel and aluminum rattled investors. The dollarfell against most currencies, dropping to its lowest in morethan two years against the yen, as Trump's tariffs proposalraised prospects of a damaging trade war. said on Thursday that a plan for tariffs of 25 percenton steel imports and 10 percent on aluminum products would beformally announced next week. a country (USA) is losing many billions of dollars ontrade with virtually every country it does business with, tradewars are good, and easy to win," Trump said on Twitter onFriday.
In a later social media post, the Republican president saidhis aim was to protect U.S. jobs in the face of cheaper foreignproducts, a familiar theme in the "America First" credo hecampaigned on for the 2016 election.
"We must protect our country and our workers. Our steelindustry is in bad shape. IF YOU DON'T HAVE STEEL, YOU DON'THAVE A COUNTRY!" he wrote.
Trump earned some bipartisan support from lawmakers, mainlyfrom America's rust belt states.
"This welcome action is long overdue for shuttered steelplants across Ohio and steelworkers who live in fear that theirjobs will be the next victims of Chinese cheating," said SenatorSherrod Brown, a liberal and populist Democrat from Ohio. Governor Scott Walker of Wisconsin, a fellowRepublican, urged Trump to rethink the tariffs.
"If the president wants to protect good-paying,family-supporting jobs in America, especially here in Wisconsin,then he should reconsider the administration's position on thesetariffs, particularly on ultra-thin aluminum," Walker said in astatement.
Many economists say that instead of increasing employment,price increases for consumers of steel and aluminum such as theauto and oil industries will destroy more U.S. jobs than theycreate.
RETALIATION LIKELY
Major U.S. trade partners are likely to hit back.
Europe has drawn up a list of U.S. products on which toapply tariffs if Trump follows through on his plan.
"We will put tariffs on Harley-Davidson, on bourbon and onblue jeans - Levi's," European Commission President Jean-ClaudeJuncker told German television. threats to unleash a trade war over steel crushedany hopes of substantial progress in current talks with Canadaand Mexico to rework the North American Free Trade Agreement,heightening fears for the trade deal's future. Prime Minister Justin Trudeau said any U.S. tariffson steel and aluminum would be "absolutely unacceptable" andvowed to continue to engage with U.S. officials on the issue.
The International Monetary Fund also expressed concern,saying the proposed tariffs would likely damage the U.S. economyand those of other nations. announcement came after what one person with directknowledge described as a night of "chaos" in the White House dueto frequent switching of positions in the administration.
While Trump often lays out stark policy positions which helater rolls back as part of a negotiating tactic, White Housespokeswoman Sarah Sanders said the levels of the planned tariffswere not expected to change.
Capital Alpha Partners, a policy research group inWashington, said a quick reversal by Trump was highly unlikely.
"We also don't see a chance for fine tuning, exceptions,carve outs, or a country-by-country policy" in the short term, the group said in a research note. "We would be hopeful that thepolicy could be modified in time."
The United States is the world's biggest steel importer,buying 35.6 million tonnes in 2017. Navarro, a White House adviser with largelyprotectionist views on trade and author of a book entitled"Death By China," brushed off the negative effects of tariffs onU.S. industry.
He said a 10 percent tariff on aluminum would add one centto the cost of a can of beer, $45 to a car and $20,000 to aBoeing 727 Dreamliner. "Big price effects? Negligible priceeffects," he told Fox News.
But home appliance maker Electrolux ELUXb.ST said it wasdelaying a $250 million expansion of its plant in Tennessee asit was worried U.S. steel prices would rise and makemanufacturing there less competitive. administration has imposed a series of trade dutieson a range of goods from solar panels to washing machines.
It is even studying whether America's rubber band makersneed protection as Trump seeks to boost domestic manufacturingand employment. The decision on steel and aluminum was the mostwide ranging and provocative to date and there is the prospectof more to come, with the government holding an investigationinto alleged theft of U.S. intellectual property by China.
Trump made his tariff announcement as Chinese President XiJinping's top economic adviser, Liu He, was visiting Washington.
Liu held a second day of talks at the White House with Treasury Secretary Steven Mnuchin, White House economic adviserGary Cohn and Trade Representative Robert Lighthizer, and theU.S. officials stressed concerns about the U.S. trade deficitwith China, market access and unfair treatment of U.S.companies.
"We held frank conversations," a White House spokeswomansaid. We continue to be open to an exchange of ideas on how toresolve these concerns."
White House officials said Trump himself did not stop by themeeting with Liu as he sometimes does when senior foreigndignitaries, including Chinese officials, are visiting.
China, which Trump frequently accuses of unfair tradepractices, earlier called for restraint.
"China urges the United States to show restraint in usingprotective trade measures, respect multilateral trade rules, andmake a positive contribution to international trade order,"Foreign Ministry spokeswoman Hua Chunying said.
Although China accounts for only 2 percent of U.S. steelimports, its massive industry expansion has helped produce aglobal steel glut that has driven down prices. EU, which sees itself as a global counterweight to aprotectionist-leaning Trump, spoke of countermeasures conformingwith World Trade Organization (WTO) rules.
Safeguard measures, last deployed by Europe in 2002 afterthen-U.S. President George W. Bush imposed steel import duties,would be designed to guard against steel and aluminum beingdiverted to Europe from elsewhere if U.S. tariffs come in.
But to conform with WTO rules such measures would have toapply to imports from all countries and could also hit producersincluding China, India, Russia, South Korea and Turkey.
Economists say that Trump's own expansionary budget policieswill fuel ever larger trade deficits, essentially defeating hisstated aim of having “balanced trade” with individual countries.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Top 10 global steel exporters
http://reut.rs/2F4MJ6TFACTBOX-Top steel exporters to the United States
steel product imports
http://tmsnrt.rs/2oPeo1zAsia may face steel and aluminium glut
firm response to stop short of trade war with Trump
steel flood ebbs just as trade war looms
sledgehammer will Trump use on U.S. aluminiumimports?
incoherent strategy dooms tariff crusade -