Trump’s unpredictable trade tactics rally Europe as China sit-down awaits
UNITED NATIONS — With trade and tariff polices shifting like the proverbial weathervane, the Trump Administration has confused and confounded even many close trading partners, Europe, Canada and Japan among them.
This may be the Donald’s tactic in his wider strategy of getting fairer trade and better “deals” for American consumers. Conversely the concocted tariff threats, particularly aimed at China, could precipitate a grand commercial clash whose seemingly chaotic plan insures American trade supremacy in the face of powerful global competition.
That Free Trade should be Fair Trade has been a Trump mantra. Since the 1990’s the People’s Republic of China has been the primary economic rival to America’s once unassailed industrial base. Indeed Beijing’s massive trade surplus with Washington, a whopping $375 billion in 2017 alone, has been fueled by American consumer spending as much as by Beijing’s business machinations.
But testy transatlantic trade relations between the USA and the European Union’s 27 members have defied historically close political, military and economic ties. Two-way trade between the United States and Euroland reached almost $1 trillion last year!
Given that much of President Trump’s trade rancor is aimed at China, why then slap broad brush tariffs on Western Europe? Yet steel and aluminum tariffs are just that.
European Commission President Jean-Claude Juncker visited Washington in what he expected would be an ill-fated last ditch effort to stop the tariffs; in a stunning turnaround the European Union and the USA concluded a Transatlantic trade truce which happily surprised business and political players on both sides of the Atlantic.
The unpredictable Trump did not foolishly forego close commercial and political ties with Europe, knowing full well that even a powerful America needs trade allies in the bigger showdown with Beijing. Trump stated the goal was “zero tariffs, zero non-tariff barriers, and zero subsidies on non auto industrial goods.”
Donald Trump wants a truce, then a deal with Europe, not a trade war.
As Jamie Fly of the German Marshall Fund opined in the Wall Street Journal, “With Europe finally getting serious about the threat posed by China, there couldn’t be a worse time for the Trump Administration to antagonize its natural allies with tariffs.”
Currently, the EU slaps a 10 percent tariff on U.S. made autos while the U.S. puts 2.5 percent duty on European cars, mostly German and British imports.
Trump’s particular deal changer was to get the EU to purchase more soybeans, exactly to counter lost sales from China and to thus support American agriculture, and to purchase U.S.
Liquid Natural Gas (LNG) as a way to wean the EU off its current dependency on cheap Russian natural gas. Both the Europeans and U.S. came away happy or at least relieved.
China has been courting and wooing the Europeans for closer commercial and political ties in direct proportion to the rhetorical rifts with the United States. The perception that the Trump Administration wants to restrict or redirect EU trade ties has allowed Beijing to play its game in Europe, even though many European states are still nervous about closer political links with China. Not only human rights concerns, but technology theft and widespread industrial espionage, shadow that relationship. Nonetheless, the EU is China’s second largest commercial market with $667 billion in trade last year.
China’s Premier Li Kiqiang told a recent meeting in Bulgaria, “Countries are welcome to board China’s economic express to share opportunities of China’s development.” Indeed many European Union states including Germany have spoken of closer cooperation with China as a counterweight to its trade tensions with Washington.
The United States economy has reached an impressive 4 percent growth for the second quarter, clearly a byproduct of business and consumer confidence, low unemployment, significant tax cuts, all of which create an upbeat economic climate. This is the good news and it’s sustainable providing the administration does not derail its own success with the President’s pet peeves.
As the Wall Street Journal advises editorially, “Mr. Trump’s trade policies are the biggest threat to that economic progress.”
Now it’s time for the United States to accelerate smoothing out trade disputes with key partners; the European Union and certainly Canada and Mexico through a renegotiated NAFTA. It’s time to importantly refocus on Japan and South Korea. Then Washington and Beijing must seriously sit down and speak to each other, not at each other. The world awaits the outcome.
John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is the author of Divided Dynamism the Diplomacy of Separated Nations: Germany, Korea, China (2014). [See pre-2011 Archives]