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What do bourbon whiskey, Levi’s jeans, peanut butter and cranberries have in common? These all-American products may soon be on the receiving end of steep EU tariffs as an imminent trans-Atlantic trade war looms ever larger.
The proposed levies for these goods were discussed by EU trade commissioner Cecilia Malmström yesterday in a press conference responding to US president Donald Trump’s proposal to introduce a 25% tariff on steel imports and a 10% tariff on aluminium.
Malmström rebuked Trump’s proposal, saying that she had “serious doubts” about the reasoning behind the White House citing national security issues as a reason for justifying these tariffs.
“We cannot see how the European Union, friends and allies in Nato, can be a threat to international security in the US,” said Malmström. “It is alarming that the US would invoke this article from 1962, to introduce trade restrictions that will mainly impact traditional allies of the United States.”
Malmström added that should the President press ahead with the move, "it will hurt the European Union. It will put thousands of European jobs in jeopardy, and it has to be met by a firm and proportionate response."
Elsewhere, as a response to Trump’s tariffs, China threatened an “appropriate and necessary response” should the US go ahead with a trade war.
The White House has since announced a softening stance, saying that there might be exemptions to the tariffs, including a 30-day exemption for Canada and Mexico on grounds of national security.
"There are potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well based on that process,” White House spokeswoman Sarah Sanders commented. “That would be [on] a case-by-case and country by country basis."
Trump has signalled his intention to potentially sign the new tariffs into law by the end of this week.
Clearing The Opposition
Trump announced the tariffs a week ago, leading his economic adviser Gary Cohn to resign.
Cohn, a pro-trade former Goldman Sachs exec and a registered Democrat, was seen as the main bulwark against protectionist trade policies favoured by the president and a large part of his popular base
The president also received criticism from members of his own party, chiefly from Republican House speaker, Paul Ryan.
“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” a spokeswoman for Ryan told The New York Times. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardise those gains.”
Market Shocks
The US stock market went on a downward trajectory as Malmström’s made its way across the Atlantic. The EU is one of the top steel importers into the US, along with Canada and South Korea.
Elsewhere, Jack Daniels parent company Brown-Forman’s CEO Paul Varga said he was “monitoring and observing” the current developments, while adding that his company has had to deal with unexpected difficulties before.
However, Varga said that these protectionist policies could inadvertently harm the types of classic American business that Trump so vehemently says he wants to protect.
International Condemnation
Meanwhile the IMF’s managing director Christine Lagarde warned that 'nobody wins' in a trade war and there generally are losers on both sides
“The macro-economic impact would be serious, not only if the United States took action, but especially if other countries were to retaliate, notably those who would be most affected, such as Canada, Europe, and Germany in particular,” Lagarde told French radio RTL.
“In a so-called trade war, driven by reciprocal increases of import tariffs, nobody wins, one generally finds losers on both sides,” Lagarde said.
The EU’s president Donald Tusk also hit back at his namesake in the White House by tweeting “President Trump said: ‘trade wars are good and easy to win’. But the truth is trade wars are bad and easy to lose. EU’s goal is to keep world trade alive and if necessary to protect European by proportionate responses.”
President Trump said: ‘trade wars are good and easy to win’. But the truth is trade wars are bad and easy to lose. EU’s goal is to keep world trade alive and if necessary to protect European by proportionate responses.
— Charles Michel (@eucopresident) March 7, 2018
But Trump remained defiant in the face of international criticism, tweeting yesterday, “From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!”.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: The European Supermarket Magazine.
