UPDATE – 12-03-2018: The drums of trade war are beating stronger. US President Donald Trump is moving towards implementing a 25% tariff on steel imports and a 10% tariff on aluminum. Mexico, Canada and Australia will be offered exemptions from the tariffs (which are nominally aimed at China), but it is unclear whether Europe will qualify for a similar exemption.
The tariffs are deeply divisive even within the US administration, with Trump’s economic adviser, Gary Cohn, recently resigning over the policy. Critics warn that the move will push up the price of steel, hurting US manufacturers (such as in the automobile industry) that rely on steel inputs. That’s all before we factor in retaliatory tariffs from the European Union. So, what happens next? Will Trump really follow through on his proposed protectionist move? And, if he does, how should the EU respond?
ORIGINAL 26-05-2017: Donald Trump’s first trip abroad has ruffled a few feathers (as expected). Not only did he shove aside other leaders, but he also took aim at European trade practices, declaring that: “The Germans are bad, very bad.” According to reports, Donald Trump made his comments at a meeting with Jean-Claude Juncker, the President of the European Commission, and Donald Tusk, the President of the European Council. The focus of Trump’s criticism is apparently Germany’s healthy trade surplus with the US (and EU trade policy in general).
Germany has been exporting more than it imports to America for years, and Trump has already made this observation several times. Before taking office, he complained, for example, in an interview about the many German cars on New York’s streets. During his most recent visit to Brussels, the US president once again criticised the German car industry: “Look at the millions of cars they sell in the US. Terrible. We’ll stop that. ”
Could Trump make good on this threat? He’s already threatened several times that he would be willing to slap high tariffs (as much as 100%) on European products. One thing is certain: a trade war would have a drastic impact for both sides. EU-US trade accounts for approximately 30% of global trade. The US is the main trading partner of the European Union, with a total trading volume of €619 billion.
Is Trump preparing for a trade war with the EU? Could both sides afford such a war? What would be the consequences? And should the EU remain tough in any future trade negotiations with the US? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!
IMAGE CREDITS: CC / Flickr – The White House