With Jean-Claude Juncker probably in the air right now, flying to his White House meeting on Wednesday, President Trump threw a wrench in the prepared script when on Tuesday evening he appealed for a return to (truly) free trade and urged Europe to “drop all Tariffs, Barriers and Subsidies” shortly after his administration imposed tariffs on EU imports, and Europe retaliated.
“That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!” Trump tweeted.
The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!
— Donald J. Trump (@realDonaldTrump) July 25, 2018
Earlier on Tuesday, ahead of his meeting with top eurocrat Jean-Claude Juncker in which the European Commission President hopes to calm the escalating trans-Atlantic trade fight, Donald Trump tweeted “Tariffs are the greatest!”
Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that – and everybody’s talking! Remember, we are the “piggy bank” that’s being robbed. All will be Great!
— Donald J. Trump (@realDonaldTrump) July 24, 2018
“Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs… Remember, we are the “piggy bank” that’s being robbed…” and also “Countries that have treated us unfairly on trade for years are all coming to Washington to negotiate.”
Juncker told reporters last week he is “upbeat and relaxed”; however, one doesn’t need a crystal ball to know that things are likely not going to go well at the meeting, as Bloomberg reports that the European Commission President “won’t be coming to the White House with a ‘great deal’ on trade to counter Donald Trump’s recent criticism of the European Union and his claims it runs a $150b surplus with the U.S.,” according to an unnamed European official.
The last time the two met face to face, at the recent G7 summit in Quebec, the EU’s most senior official told fellow European leaders that Trump had called him a “brutal killer” — though possibly in the spirit of jesting, over what Trump identified as unfair EU trade policies and fines on American tech companies.
Last week Cecilia Malmstrom, the European Union trade commissioner who is accompanying Juncker on his trip, indicated he would attempt to persuade Trump against his threat of raising tariffs on European car imports, possibly wrecking a $1 trillion trade relationship which the EU says will be disastrous for both sides of the Atlantic, with 15 million jobs on the line.
Ahead of Wednesday’s meeting a European Commission spokesperson said, “It is an opportunity to de-dramatize any potential tensions on trade and to engage into an open, constructive dialogue with our American partners” — however drama is what we fully expect, as when Trump initially announced tariffs in March, Juncker vowed EU retaliation by declaring “we can also do stupid”.
Since June, US-European tensions have reached a boiling point after Trump continued imposing tariffs on steel and aluminum imports into the US. As Juncker himself again vowed in a speech last week, saying “We will continue to respond toe-to-toe to provocations,” and “All efforts to divide Europeans are in vain” — the EU in response imposed retaliatory trade taxes in early summer on a number of the country’s most famous brands, including Levi jeans, Harley Davidson motorcycles, and bourbon whiskey. As we reported earlier, companies like Harley Davidson are already reeling as profitability will take a huge hit according to the company’s latest forecast after being thrust into the middle of the trade war.
More recently, Trump has complained of currency manipulation , accusing “China, the European Union and others” of “manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge” in a tweet last Friday.
Finally, and most concerningly to Brussels (and Berlin), Trump has threatened to target the European automotive industry with even more tariffs, saying in a June tweet, that he would slap 20 percent tariffs on European car makers, insisting American manufacturers should “build them here” in accordance with this ‘America First’ doctrine.
Customs duties on imported cars considered by Trump would amount to an additional burden of around €5b for German companies “in the first round alone,” Eric Schweitzer, president of the DIHK association of German trade chambers, told Passauer Neue Presse.
Schweitzer said that he’s taking Trump’s threats “very seriously,” and attaches “outstanding importance” to Wednesday’s trip of EU Commission President Jean-Claude Juncker to Washington for talks with Trump
Ironically the German reached the “same” conclusion as Trump: “accusing friendly partners of threatening national security is downright bizarre. Instead of new tariffs, we need fewer trade barriers.”
Ok, well, in that case follow Trump’s advice and drop all “tariffs, barriers and subsidies” What better way to have fewer trader barriers…
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Author: Tyler Durden