“sOn March 31, Slovak Prime Minister Robert Fico had not violated European trade, which had been disciplined by the European Commission President Ursula von der Leyen to punish him for the Trump administration and trade and tariffs for leaders, and not violated European trade governance. voice.
What the EU says in response to Donald Trump’s tariff rampage is still negotiated. It is far from the most severe casualties of the tariffs that the US imposed on April 9th. The EU rate is set at 20%, much below China’s 104% or Vietnam’s 46%. Many European instincts are to fight back kindly. However, the crashing global stock market (see charts), as well as a 34% counterattack on China’s own 34%, could already be giving Trump sufficient pushback. As America’s largest trading partner, the EU has chosen to take weeks to create a more measured and targeted response.
Europe has great advantages. Unlike the US, it works with other parts of the world under the same conditions as before. This limits economic damages. “This is a matter of reallocating resources and markets,” says Alvaro Muñoz, chief executive of Amfresh, a large Spanish producer of fresh produce. EU rules-loving bureaucracy is now an asset and promises a encouraging measure of stability. Investors fearing the world trade war could cause a recession, and a sudden European counter-off will only exacerbate the damage. Instead, European governments can counter the drag on American tariffs by spending more. The European Central Bank could also cut interest rates faster.
So far, the message from the leader has been very consistent. “Nothing can be ruled out. All instruments are on the table,” said French President Emmanuel Macron shortly after the tariff announcement. “The EU will respond to the proportionality, unity and strength that comes from being the world’s largest trade zone,” Spanish Prime Minister Pedro Sanchez was seconded. Italian Prime Minister Giorgia Meloni is preparing to make a visit to the White House and negotiate a collective message on behalf of Europe.
In a way, Trump missed the opportunity to spiral discord. His tariffs treat the EU as a single trading block, as it is legally the case. Applying different fees to different countries allows them to oppose each other (see chart). Meanwhile, his speech on annexing Greenland has become a common line of Europe, even ordinary Hungarians.
But maintaining unity can be difficult. Macron hosted major industrialists and exporters at Elise Palace, urging them to suspend investment in the United States. Not everyone is happy. German officials fear that businesses will lobby favors in Washington and undermine the EU’s collective response. Politicians who don’t want to waste a good crisis are keen to hit American tech companies. Ireland, which hosts the European headquarters of many American high-tech companies, was as scary as expected. France and Italy have their own pain. They successfully pleaded to exempt whiskey from EU retaliation against America’s early steel tariffs after Trump threatened to bring 200% tariffs on European wine when he targeted alcohol.
It’s important how decisions are made. Under EU treaty law, tariffs are issues that the Commission sets on its own. However, heavy measures such as limiting market access require the majority of governments of member states. And some parts of Arsenal in trade defense are still in the hands of the people. It is something national governments can do to raise taxes on American tech giants. For example; corporate taxation exceeds the authority of the committee.
Ms Von Der Leyen has already repeated the old offers from the EU to eliminate tariffs on all industrial products between the Bullock and the United States. Trump agreed to work towards such a zero-tar-five deal in 2018 after trade spewed during his first term. This time he quickly refused the bid and fell into his good bounty, demanding that the EU purchase $3500 billion worth of fossil fuels (almost all energy imports in the year).
The European response probably combines three things. First, let’s show the strength. Germany’s resigning vice-president, Robert Habeck, said the EU should consider using its intense tool, the anti-course device (ACI). The ACI allows the EU to use a wide range of measures beyond tariffs to counterattack countries that put economic pressure on member states. These include blocks of exports of products that Americans find difficult to exchange, or exclude some American companies from the European market. Trump’s tariff attacks are a textbook case. ACIs require weeks or months from the investigation to the final decision. This is very good for bringing Trump to the table. This is a tool worthy of the size and power of the EU. But European leaders are still using it to reduce it.
The second factor is a stable ratchet-up of tariff threats as a way to drive negotiations. Trump first imposed tariffs on steel and aluminum, with automobile tariffs second and new “retaliation” tariffs third. This will allow the EU to gradually escalate. On April 7th, we presented a list of tariffs against metal products. These will be official after the vote on April 9th. Tariffs on these metals will affect EU exports of around 26 billion euros, but the bloc has decided to reduce US exports by indicating it does not want a trade war. The next step is automatic fee retaliation. Trump’s response to wider tariffs will likely come at the end.
Part 3 of the possible response is support for affected European companies. Sanchez met with business leaders shortly after Trump’s tariff announcement and presented a 14 billion euro plan, including a credit guarantee of 5 billion euros, to businesses that have liquidity issues due to their orders being lost. (The Spanish leader said, “Our values are not for sale, we spoke in front of our sign. [wines] ) The tariff war has prompted a rare outbreak of bipartisanship in Spain’s usual polarization politics. Other countries certainly provide relief to their businesses. At next week’s meeting, the European Central Bank may announce unexpected steep cuts to ease the horrifying mood.
The EU now has an extraordinary opportunity to abandon protectionism and become a major global champion of free trade. Unfortunately, it probably won’t grab it. Instead, Europe wants to set barriers to stop global overproduction from being washed away on the coast as American markets close. Ms Von Der Leyen revealed this in a call with Chinese Prime Minister Li Qiang on April 8th. This is the best moment to lower European absurd tariffs on agricultural imports, but it has not been discussed. Many officials say they want more trade deals. France is looking at the deal it reached between the EU and South American trade bloc Mercosur in December. But Bullock has yet to consider bolder moves, such as applying for 12 people to join the CPTPP, an Asia-oriented trade agreement that took over the trans-Pacific partnership after the US dropped out during Trump’s first term.
Another rule for the Trade Combat Club is that the fight continues as long as they have to. With global order and European security at stake, this trade war is undoubtedly more than tariffs. So does European goals. “What does it take for Republicans to abandon Trump, what does it take for the party to lose both homes badly in the mid-term?” asks Wong of Brussels. “And is it worth the recession in Europe? The answer is probably yes.” ■
Source link
