Brussels is said to be targeting Harley Davidson, bourbon, peanut butter, denim jeans and a number of products that are not only “iconic” but will hurt prominent Republicans in their constituencies. Although retaliation will be iconic and politically targeted, it will also be proportionate. According to Bloomberg, the EU is planning tariffs to the tune of €2.8 billion on American by June 20.
US tariffs on European steel and aluminium come into force on Friday, aligning the status of Europe with that of Mexico, China, Canada, South Korea, Japan and China. The 25% tariff on steel and 10% on aluminium are meant to shield the US economy from a glut in production, which is mostly attributed to China.
French Finance Minister Bruno Le Maire and German Finance Minister Olaf Scholz are few of the European leaders condemning US unilateralism. Bruno le Maire reminded Washington that Europe is its biggest trading partner.
France’s President Emmanuel Macron was more dramatic, recalling that “economic nationalism leads to war,” in an explicit reference to the 1930s. But, President Macron was also resolute, making clear that the EU will not negotiate “while there’s a gun pointed at our head.”
Joining the European consensus is Canada’s prime minister Justin Trudeau, who has also vowed to take retaliatory measures. Canada and Mexico will also be joining the EU’s case in the WTO.
US President Donald J. Trump is already seeking its next targets, with reports on Thursday that his next target will be the German car manufacturers. It is also bracing for $50 billion in tariffs on Chinese imports, ending a recent trade truce.
US Secretary of Trade Wilbur Ross recalled on Wednesday that there are a number of EU tariffs on US products and that negotiations can take place while US measures come into force. But, Brussels will not negotiate until Washington withdraws the new tariffs regime.
Trump made the encounter with Europe personal by criticising German Chancellor Angela Merkel in one of his Tweets by mentioning the failure of Germany to meet the agreed 2% military expenditure for NATO threshold and pointed to Berlin’s trade surplus.
US stocks started losing ground on May 31 after it became clear that Canada, Mexico, and the EU will not avoid US tariffs. US value chains are integrated with Canada and Mexico, while Europe and China remain key international markets. Among the biggest losers are Boeing and Caterpillar, although the US steel industry and car manufacturers are coming up as winners.
Meanwhile, the International Monetary Fund is warning that a wave of protectionist forces could undermine global economic outlook.
https://www.neweurope.eu/article/eu-braces-retaliation-us-tariffs-come-effect/