The European Union is responding to the vast commercial war of President Trump with a handshake and a punch: it promises that potential administrative victories also prepare their retaliation rates on American products starting next week.
The questions are if the entrances are sufficient and if a strength show could return against.
“Europe can damage America and revenge seems like a good strategy if you believe that Trump worries about the political repercussions from economic pain here at home,” said Michael Stain, director of studies on the economic policies of the Think Tank Conservative American Enterprise Institute, in Washington. “The concern is that he doesn’t care.”
Trump threatened to impose enormous additional rates to Chinese assets to punish the nation for reacting against his previous rates, and his team seems to give some nations that have not taken revenge and have close economic ties with the United States – in particular Japan – the priority in negotiations.
At the same time, Mr. Trump has yet to grab the carrots that Europe has drew in front of him. Ursula von der Leyen, president of the European Commission, offered Monday to abandon the rates on imported American cars and other industrial products to zero if the United States do the same, a “zero-for zero” strategy. When asked about this possibility, Mr. Trump said “is not” enough to do it back.
Instead, the administration seems to be awaiting its wave of recently announced rates, at least for now. The Trump administration has announced the samples of 20 percent through the withdrawals on the EU, as well as those even higher on steel, aluminum and cars.
In this context, representatives of the whole European Union should vote on Wednesday on a series of retaliation rates that would have responded to the American steel and aluminum withdrawals. If approved, those counter-hedes would take hold in phases starting from mid-April, in the first attempt of the blockade of launching its economic weight, bet that it can produce American officials towards an agreement.
The European Union is the most important commercial partner in the United States with some measures, when its 27 nations are taken as a whole. But so far, Trump has expressed his will to accept short -term economic suffering in exchange for a long -term reorganization of the global trading system.
“Trump has clarified that any pain in the American economy caused by targeted rates will not serve as a deterrent for an escalation of rates,” said Eswar Prasad, an economist focused on international trade at Cornell University. “So there is no clear ramp.”
European officials are aware of the fact that a Tit-Per-Tat commercial war would also cost the companies and consumers of the continent. And since Europe sells more assets to the United States than it purchases in return, the block lacks the upper hand, in particular when it comes to physical products: if it responds to each rate with a counterintelligence, the imports to put the penalties will be limited to finish.
This is the reason why Europe is adopting its slow and multiple approach: moving gradually and in phases to implement the rates of goods, threatening the possibility of affecting American services such as large technological companies and hoping that America will arrive at the table before retaliation takes full full.
“We are trying to avoid rates,” said Olof Gill, spokesman for the European Commission, Tuesday during a press conference. “Our answer is gradually, calm, calibrated and targeted.”
In many ways, Europe is playing in time.
If it moves gradually, it is possible that the collapse of the prices of actions decreases the American appetite for a commercial war. The markets strongly decreased last week, a painful blow for American retirement accounts and investment nesting eggs. Fall markets could reduce internal support for rates in the United States.
“We are waiting for our American counterparties to commit themselves significantly,” said Gill.
Trump suggested late on Monday that he could be willing to conclude an agreement with Europe, if he eliminates his commercial imbalance with the United States. He said he could do it by greatly expanding the purchases of oil and gas to $ 350 billion, the number he claims for the commercial deficit with the European Union. It would be an immense increase of what the United States energy acquires, that Goldman Sachs estimates have been around 63.5 billion euros, over $ 69 billion, last year.
Most of the estimates put the much lower American commercial imbalance than Trump, and the European Union measure places it at approximately $ 171 billion only for the goods. The deficit shrinks to $ 52 billion when services count, since the United States sell in particular more internet and technological services than it does not acquire from the blockade.
European leaders suggested the desire to buy more American fuel, but the purchases of natural gas so large would be difficult to promise, if not impossible, said a number of analysts. Among other issues, gas purchases are guided by the demand on the market, not only to political decisions.
Furthermore, “Europe will not want to replace its total total dependence on Russian natural gas with a total dependence on” American Liquid Natural Gas, said Krishna Guha to EVERCORE ISI.
Also on Monday, Trump expressed comfort in leaving at least some of the long-term rates-news for the Europeans who hoped for a quick and negotiated solution.
This lack of progress is the reason why Europe is preparing to hit. European officials have spent weeks check the list of rates that are on the vote on Wednesday, trying to make sure that the list does not damage European companies or European customers.
The size of the list was cut during that process and it is expected that products such as Bourbon are eliminated; America had threatened to hit European alcohol with a 200 percent fee if the bourbon remained in crossed hair.
But there are serious questions that Europe will get to regret with retaliation. China’s decision to go back pushed Mr. Trump’s threat to submit Chinese imports to an incredible 104 %rate.
On social media, Trump has blamed China for responding “despite my warning that any country that takes revenge against the United States by emitting additional rates, above and beyond their already existing long -term tariff abuse of our nation, will be immediately welcomed with new and substantially higher rates”.
While European officials try to understand exactly what America wants and what could lead to an agreement, the steel and aluminum false ceilings that could take hold next week would be only the first move in their retaliation.
Gill, the spokesman for the European Commission, suggested Tuesday who proposed countermeasures for the 20 % rate on the EU assets that Trump announced on April 2 could arrive as soon as next week. European officials are also talking whether to use a new commercial weapon to hit large American technological companies with commercial barriers.
But the risk is that these threats will fall unheeded, because the goal of Mr. Trump is to fill the global commercial system – and because this is his second mandate as president, which could make him less worried about making political support at home slip.
“There are many risks for that strategy,” said Fore.