President Trump is about to unleash a trade war with the European Union if the EU does not meet his demand to take unilateral measures to lower the US trade deficit with the EU, according to Raoul Leering, Head of International Trade Analysis at ING.
Key Quotes
“At the end of April President Donald Trump demanded trade concessions from the EU by the first of June, at the pain of raising tariffs on EU steel and aluminium. Countries such as South Korea have already yielded to the same blackmail tactics from the US government. Canada and Mexico are also prepared to make concessions in the ongoing NAFTA re-renegotiations and even China has made some concessions.”
“But the EU has held firm and asked the US to remove the threat of steel and aluminium tariffs before talking about changing the trade conditions. The EU is in a better position to issue this demand than other countries.”
“Resuming the TTIP (Transatlantic Trade and Investment Partnership) negotiations, on the other hand, would bring benefits to both trade giants.”
“A free trade agreement is not only superior to the current strategy of Trump because he has difficulties strongarming the EU, so it would avoid a mutual harmful trade war, but also because such an agreement would result in larger benefits for the US then unilateral EU- concessions.”
“What the EU should be doing
- In light of President Trump’s preoccupation with the car industry, the EU should try to lure the US to the negotiating table with an offer to reduce EU import tariffs on cars to equal the US’s 2.5%.
- For TTIP negotiations to resume, support will need to be rebuilt in both the US the EU. To assist in this, contentious issues such as chlorinated chicken, blue cheese and a mechanism to settle disputes between foreign investors and domestic governments, might have to be set aside. This would result in a TTIP 2.0. To build support, the tainted TTIP acronym should also be discarded.”
“Whatever it takes, a broad trade agreement between the US and EU is the best answer to the current trade conflict.”
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