The European Union (EU) and the United States appear to have entered a full-blown trade war, with President Trump and Brussels slapping sky-high tariffs on each other's goods.
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| The US President stressed his stance that he 'will not make any concessions' to the EU. (Source: Think.ing) |
Trade tensions between the EU and the US escalated as Brussels announced 26 billion euros ($28 billion) in tariffs on goods from the world’s largest economy , in response to the Trump administration’s 25 percent tariffs on steel and aluminum.
The White House chief then threatened to impose a 200% tariff on wine, cognac and other alcoholic beverages imported from Europe. The president also stressed that he would “make no concessions” to the 27-member bloc and would not reconsider the reciprocal tariffs that are scheduled to take effect on April 2.
Cecilia Malmstrom, a nonresident senior fellow at the Peterson Institute for International Economics, sees the tit-for-tat tariffs as an escalating conflict.
“This is a lose-lose game,” Cecilia Malmstrom said. “Consumers will suffer the most because tariffs will push up prices, affecting inflation, employment and growth.”
EU's Weaknesses
The 27-member bloc opposes the tariffs. European Commission President Ursula von der Leyen said higher tariffs were disrupting global supply chains and causing economic uncertainty.
According to many experts, the transatlantic trade relationship is the most important trade relationship in the world .
Data released by the Commission shows that trade in goods and services between the US and the EU will reach €1.6 trillion by 2023. The agency describes the relationship as balanced, with the difference between the 27-member bloc's exports to the world's largest economy and vice versa representing just 3% of total trade between the two sides.
Meanwhile, Mr. Trump constantly complains that the EU sells more to the US than it buys. In 2023, the bloc exported 503 billion euros of goods to the US market and imported 347 billion euros.
When it comes to Europe’s vulnerabilities, Ms. Malmstrom is particularly concerned about the auto industry. “The auto industry in Europe is vulnerable right now. That’s what President Trump is aiming for,” Ms. Malmstrom stressed.
The expert cited the example of Swedish auto giant Volvo, which she said had been hit by rising steel and aluminum prices and was now worried about new tariffs from the world's largest economy.
European carmakers have repeatedly warned of the dangers of tariffs at a time when the industry is grappling with competition from China, the shift to electric vehicles (EVs) and deindustrialization trends across the continent.
Hildegard Muller, President of the German Automotive Industry Association, said that if the White House boss increases tariffs on cars from the EU, this will have a negative impact on all exports from the 27-member bloc to the US.
“Tariffs will affect growth and prosperity on both sides of the Atlantic,” she said.
What has Europe prepared?
Europe's dilemma now is that it is unclear exactly what Mr. Trump's real purpose is in imposing tariffs. Will the President consider tariffs as a negotiating "card" or a way to increase or decrease the trade deficit with America's major partners?
Europe's strategy is to respond in kind to US actions to avoid escalating tensions. However, Brussels is also preparing for a trade war scenario.
Officials have considered the possibility of imposing tariffs and market restrictions on US service companies if the situation worsens.
According to Carsten Brzeski, an economist at ING Research, such a move would only be made in exceptional circumstances. European officials still hope to be able to sit down at the negotiating table with the US.
Still, Ms Malmstrom urged the EU to prepare as best it could for a protracted and potentially damaging dispute.
"No one wants this situation to last for many more years. European industries are starting to feel the pain and certainly American businesses are too. This was demonstrated in the tariff war in Trump's first term."
Source: https://baoquocte.vn/xung-dot-thuong-mai-my-eu-them-cang-chau-au-xuat-hien-diem-yeu-chinh-la-don-manh-cua-ong-trump-307817.html
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