Trade Fight Brewing Between U.S. and E.U.

Chris Dios - August 20, 2019

Trade War News: Trump Eager to Take on E.U. Trade Deficit

In the latest trade war news, President Donald Trump sent a clear message to E.U. policy-makers at a rally in New England last Thursday.

The European Union is worse than China, just smaller. It treats us horribly: barriers, tariffs, taxes,” Trump said at a rally in New Hampshire, “They treat us really badly.”

This is familiar territory for the President. He has a history of attacking EU policies that, he says, are unfair to U.S. businesses.

France’s Controversial New Tax Law

The President renewed his focus on EU trade practices after France announced a tax that would target 3% of business revenues from digital activities.

When the news broke a few weeks ago, Trump tweeted;

trade war news-european union

American tech companies make their first payment under France’s new tax policy in November, and some experts expect the U.S. to retaliate before the law comes into effect.

The White House wants to get its China ducks in a row before getting into another large-scale trade conflict, but a U.S. response to the new French tax seems all but assured.

The U.S. has an $83 billion USD trade deficit with the European Union and the President aims to correct that inequality. To Trump, trade deficits are the primary evaluator for trade deals.

In a meeting with South Korean President, Moon Jae-In, in 2017, Trump said:

“The United States has trade deficits with many, many countries, and we cannot allow that to continue.”

-Donald Trump

German Auto Tariffs

Germany drew Trump’s ire earlier this year, prompting a review of potential tariffs on German goods.

In May, the Administration delayed German auto tariffs for up to six months so the U.S. could focus on ongoing negotiations with the E.U. and Japan.

The automobile industry is a disproportionately large portion of Germany’s economy. As a result of that imbalance, tariffs could potentially send the slowing German economy into a recession.

Trade deficits are an obvious priority for this administration, but the U.S. has to pick its battles.

Inaction doesn’t equal indifference. It’s only a matter of time before U.S.-E.U. trade negotiations start heating up.

However, the U.S. may hay have a trick up its sleeve.

Post-Brexit Britain

Britain’s official exit from the E.U. is scheduled for Halloween this year and pursuing a trade deal with the U.S. seems to be a logical first step for post-Brexit Britain.

Before Johnson even took office, Trump expressed his confidence in Johnson’s leadership ability:

“I have always liked him. I don’t know that he is going to be chosen, but I think he is a very good guy; a very talented person.”

-Donald Trump discussing Boris Johnson (May 2019)

The dynamic between these two politicos appears to be ripe for an alliance.

Trade War News: Closing Thoughts

Bringing Britain into the fold could be a game-changer for both countries, providing additional leverage in their respective negotiations with the European Union.

The E.U. trade deficit is an important issue for the White House, but China negotiations are taking center stage at the moment.

The U.S. doesn’t have enough dry powder to simultaneously take on China and the E.U. in an all-out trade conflict, but Europe is clearly on Trump’s hit list.

However, it’s unclear when the U.S. will have the means and opportunity to address its issues with its European allies.

Whatever happens, post-Brexit Britain could play a key role in future U.S.-E.U. trade negotiations.

Chris Dios

Stock Dork Trade News

Chris Dios is an American writer and entrepreneur based in the Greater NYC area.

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