EU Threatens Trade War Over Trump’s Tariff Plan
EU to “forge a coalition of countries” to fight proposed US import tariffs
Rattled by President Trump’s proposal to raise tariffs on steel and aluminum imports, the European Union is threatening the U.S. with a full-blown trade war. “We will now impose tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on bourbon,” Jean-Claude Junker, President of the European Commission, warned earlier this week.
“Should Trump follow his words with actions, Europe will reply proportionately,” German Economy Minister Brigitte Zypries said in response to the proposed move.
Earlier this week, President Trump had mulled the prospect to impose 25 percent import tariffs on steel imports and 10 percent on aluminum, a move aimed to prevent foreign producers from dumping cheap steel and aluminum into the U.S. market.
The EU is ready to ‘reciprocally raise’ import duty on U.S. steel and aluminum, Germany media reported on Wednesday. The EU, along with other steel and aluminum producing countries like Canada, Brazil, Japan, and China, might also lodge a formal complaint with the World Trade Organization (WTO).
President Trump might have been onto something when he said that the EU had “banded together in order to beat the United States in trade,” at a Florida fundraiser recently. As Germany’s state-run broadcaster Deutsche Welle now reveals, the EU plans to “forge a coalition of countries to agree a unified reaction to Trump’s move.” Brussels hopes to recruit Canada, Japan, Australia, and Turkey among other countries in a united front against President Trump’s move, the broadcaster said.
As a retaliatory measure, the EU Trade Commissioner Cecilia Malmström wants to target US agriculture products like peanut butter, cranberries, and orange juice, France24 revealed:
Bourbon, Levi’s jeans and Harley Davidson: these are the main products Brussels is threatening to tax in the event of US tariffs on imports of aluminum and steel. The EU did not chose these products by chance.
EU Trade Commissioner Cecilia Malmström on Wednesday added that the EU’s counter-measures would also include tariffs on US steel and agricultural products as well as on peanut butter, cranberries and orange juice.
“EU goes tactical in looming US trade war,” claimed France24. Retaliating against U.S. steel import tariffs by hitting bourbon, peanut butter and cranberries juice, doesn’t sound like a grand strategy—unless Brussels has a better card up its sleeves.
“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” Trump wrote on Twitter. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
Despite tough talk from Brussels, the EU bosses are treading on thin ice, and they know it. According to the German newspaper Die Welt, merely the talk of a trade war is destabilizing the euro currency zone. The strengthening of the euro against the dollar, as a result of President Trump’s announcement, is set to make European exports less competitive in the U.S. market, the newspaper argued:
At a meeting on Thursday, the top custodian of the euro [Mario Draghi, President of the European Central Bank] had the opportunity of criticizing the US. Since US President Donald Trump raised the prospect of imposing punitive tariffs on trading partners, the transatlantic relations have been adversely affected. Even the monitory policy, which usually is not connected to international trade policy, needs examining.
The mere announcement of the tariff on US imports has pushed the governments of key US trading partner in a state of hectic activity and the financial markets in a state of anxiety. The stock markets have fallen, the dollar has lost value. The latter can be a problem for the European Central Bank. A strong euro not only slows down the economic growth, but lead to a decline in inflation. [Die Welt, March 8, 2017; Translation by the author]
Steel and aluminum imports make up for a tiny sliver of the overall U.S.-EU bilateral trade that is somewhere in the range of $650-$700 billion annually. According to EU data, U.S. imported $5.6 billion worth of steel from Europe in 2016. During the same period, European aluminum imports to the U.S. was around $500 million. The annual U.S. trade deficit with the EU is around $147 billion. Given the trade discrepancy, if the EU gets into a trade war with the US, it has lot to lose.
Video: “I’ve warned US President Trump, we will take countermeasures,” Jean-Claude Junker, EC President
[Cover image via YouTube]
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Ron Coleman
Comments
There is no such thing as free trade. Speaking in terms of free trade is anachronistic. The world that Milton Friedman described does not exist.
Friedman: if a country taxes their citizens (their subjects) to subsidize their industries to undercut your industries, then take advantage of that government made inequality and buy at lower cost from them to your hearts contentment. Thank their citizens for making their products cheaper for you.And keep doing that until they wise up.
Well, that’s lovely. Until your country has no more critical industries like steel. And all your imported steel (and aluminum) is lower quality with more impurities made by veritable slave labor and with no environmental protections.
Canada doesn’t have a steel production industry worth mentioning. They’re below the Ukraine. They import nearly all their steel from China. That steel goes into products with American market in mind.
Liu Zhongtian, is the communist billionaire who stockpiled 6% of world’s aluminum in Mexico. The United States is the target market for the largest portion of those products. The American industries are undercut by this globalist maneuver that exploits a loophole in NAFTA.
Trump is trying to close the loophole in NAFTA that allows China to sidestep our targeted tariffs against China’s tariff and non-tariff restrictions against American products.
But Canada and Mexico cannot do something so damaging to their own interests. They cannot close the loophole that allows China access to American market. China keeps its protection against American industry and uses NAFTA to have access to our market.
Argue all you like about the importance or unimportance of fairness in trade, but stop using the term free trade, because that situation does not exist.
It’s amazing to see the whole world jump on Trump for trying to equalize trade. He’s trying to bring to our attention the trade barriers leveled against us. But he has so much built-in opposition from everyone that message simply does not get communicated.
The Harley Davison statement did say sales to Europe = 16% of its business. And that tariff will affect all industries that use steel. But there is much more that Harley Davison didn’t mention because it is too complex and muddles their anti-Trump statement.
India puts a tariff of 100% on heavy touring motorcycles. That’s why Harley Davison built a plant there.
Harley Davison is building a plant in Thailand to avoid its 60% tariff
Japan had non-tariff restrictions. License seekers for large touring motorcycles were required to pass a unique test designed specifically to exclude American made motorcycles. They had to ride across a balance beam. Only 2% passed the test.
(Their restriction against passengers of touring motorcycles has been repealed)
Free trade is a gorgeous ideal, but it must be free both ways. And it must not be manipulated by key global conglomerates and bankers who control supply to maximize cost to individual countries. They run their numbers that include government subsidies such as a nation’s healthcare programs, federal and state, and their insurance coverage to determine the cost of, say, HIV-related pharmaceuticals to cost Americans thousands of dollars per regimen while just a few dollars for African countries. And that same accounting goes for every commodity and product, from lemons and avocados to men’s suits and laptop computers.
The economic world that Milton Friedman described no longer exists. Just using the term “free trade” is quaint and indicates you’ve lost track of how the economic world works today. Tariffs are the least of the global manipulation by conglomerates that control entire segments of global commodities and industries that rival and challenge the power of nations.
That’s an amazing lode of clap-trap, starting with the notion that Milton Friedman didn’t understand there was no such thing as “free” trade, and ending with a dark hint about “conglomerates”.
Can you say Iceland?
Well said
Bour 3
HEADLINE NEWS:
Trump signs aluminum and steel tariff order that will take effect this month – but EVERY country on earth will be invited to negotiate exemptions from ‘flexible’ policy
and
Stocks close higher after Trump signs tariffs that exclude Mexico and Canada
Looks like the Jacobin Cat does not understand how the systems works. Investors seem to be giving it a big OK!
Just like Morris is wrong on Trump, he is wrong on tariffs.
OK, Alt-right boi, let’s pin you down.
About what am I wrong on tariffs?
Jacobin Morris if you have not figured it out:
But, looking back at the history of tariffs, Smoot-Hawley came pretty close to throttling international trade, and deepened and prolonged the Great Depression, while sending it all over the globe.
Senator John Heinz III – Congressional records:
see congressional record: https://www.gpo.gov/fdsys/granule/CRI-1985/CRI-1985-SMOOT-HAWLEY-TARIFF-ACT/content-detail.html
“It gravely concerns me that every time someone in this administration or the Congress gives a speech about a more aggressive trade policy, or the need to confront our trading partners with their subsidies, barriers to imports and other unfair practices, others in Congress immediately react with speeches on the return of the Smoot-Hawley Tariff Act of 1930, and the dark days of blatant protectionism and depression…It seems that for many of us that Smoot-Hawley has become a code word for protectionism and, in turn, a code word for the depression. Yet, when one recalls that Smoot-Hawley was not enacted until more than 8 months after the October, 1929 collapse, it is hard to conceive how it could have led to the Great Depression…the changes supposedly wrought by this single bill in 1930 appear fantastic.”
Your link…like your dick…is broken, Alt-right boi.
Tell us SPECIFICALLY where I’m wrong on tariffs. Don’t link some speech by some protectionist pol.
You. Now. And explicitly.
“Yet, when one recalls that Smoot-Hawley was not enacted until more than 8 months after the October, 1929 collapse, it is hard to conceive how it could have led to the Great Depression…the changes supposedly wrought by this single bill in 1930 appear fantastic.”
Wul, yah, ya drooling moron. Nobody claimed it CAUSED the Great Depression. It DID deepen and prolong it, however.
Are temporal relationships among all the other things you have trouble with…???
“It DID deepen and prolong it, however.”
Yes, you bought in to FDR stump speech. Your true colors show. Look at our import/export levels then. It is bs and made a good sound bite for the elections.
Bottomline, Smoot-Hawley supposed impacts do not apply here and Smoot-Hawley is a smoke screen that you bought in to because you were indoctrinated by a liberal MBA program (if that is true).
You speak like the true progressive you are and you can not back up that statement. You also can’t backup how Trump’s position on steel tariffs are going to hurt us either.
OK, Alt-right boi, let’s pin you down.
About what am I wrong on tariffs?
No more bullshit. Answer the question. Or STFU.
Aw the poor Jacobin Morris. I think most of us here scored our points “About what am I wrong on tariffs”. Reading comprehension seems to be an issue with you. You messed up understand who Thomas Friedman vs Milton Friedman is. Your use of profanity and your need to claim you are educated to justify that you are more knowledgeable than anyone here is classic projecting of your inferiority complex on us.
It is time to move on to something more important than engaging with you. Sorry, you’ve gotten way more attention than you deserve. I contend that you have gotten away with it for so long because most of us here respect others opinions even if we disagree with them.
Everyone can see you running, Alt-right chickenshit.
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