Trump must love trade wars
Worldwide media report that the European Union has barely a month to try to convince Donald Trump that there are alternatives to the trade war. Europeans and Americans are already negotiating possible areas of improvement to import and export in peace. Washington is fixated on one: to open the way in Europe to American cars.
Europe negotiates with the rope around its neck. The truce that the EU countries reached on March 23 to get rid of the tariffs on steel and aluminum announced by the US president expires on May 1. "The EU will not negotiate under threat, especially when we do not know exactly what they expect", Commissioner for Trade, Cecilia Malmström told Reuters. No one in Brussels believes that this deadline is realistic.
The European Commission, with exclusive commercial competences in the EU, is fighting to become permanent. But Washington threatens to put a very high price. The EU is preparing to use three types of tools if Trump ends up declaring the commercial war that he managed to avoid at the last minute on March 23. Brussels will rescue the list of more than a hundred US products that could apply tariffs of up to 25% to compensate for the damage suffered by European steel sales subject to tax.
In addition, the Community Executive will install quotas or charges on steel from other countries if it is shown that the punishment imposed by the United States on other territories (for example, Brazil) diverts to the EU the production that is no longer sold in North America. Finally, Brussels will try to agree with other partners affected by this protectionist drift to denounce it before the World Trade Organization. What the United States wants is to improve the access that its products have (and if it fails to do so, hinder the access of Europeans to the North American market) in four categories: food, cars and their components, medicines and industrial machinery.
This was reported by a senior executive of the EU Executive to the representatives of the 28 Member States in Brussels last week. "The cars are in Trump's spotlight. But any reduction of tariffs [to American vehicles sold in Europe] will be taken as a weakness”, said this representative, according to diplomatic sources. American cars, now subject to a 10% tariff to enter Europe, should support a 2.5% percentage - identical to that applied by the United States to the EU - to satisfy Washington. It is something similar to what Trump has just achieved by pressing South Korea. A scenario that Europe is suspicious of.
Even without a treaty linking both blocks, the United States is the main destination for European exports (16.9% of the total) and the second country that sells the most to the EU (13.8%), according to data from 2017. Putting the accent on cars is not casual; practically half of European exports to US soil are linked to transport. Only cars represent 12.8% of the export basket, compared to 4% in the US.