Trade strains start to show as Trump heads for Europe
london — The global economy is starting to show signs of strain from the “America First” push of US President Donald Trump who will hear renewed pleas to step back from a broader trade war when he visits Europe in the coming week.
Against a crescendo of measures and counter-measures, and threats of more to come, caution about investment is growing among employers in many countries around the world, including in the United States.
At the same time, central bankers on both sides of the Atlantic are sounding nervous about the risk of an escalation of the tensions.
Trump has vowed to stick to his promises of protection for US industries against what he says is unfair competition from China, the European Union and beyond, even if many analysts say his punitive tariffs are likely to backfire on the US economy.
Ripping up the play-book for global trade of recent decades, he hit metal imports with tariffs in June and has threatened to curb car imports from Europe with a 20 per cent duty.
On Friday, Washington implemented tariffs of 25 per cent on $34 billion of Chinese imports, part of a total $500 billion of goods from China that could be targeted for US duties. Beijing swiftly retaliated in kind.
“The world has to be prepared for an escalation of the trade conflict in the months to come,” Raoul Leering, a trade analyst at ING bank said in a note to clients.
“For now, Trump’s voters back his stance on trade, suggesting he’s unlikely to back down, particularly ahead of the mid-term elections, where the Republicans will be fighting to hold on to a majority in the Senate.”
Trump kicks off his visit to Europe at a summit of leaders of Nato countries in Brussels on Wednesday and Thursday where he is expected to hammer home his calls on other countries to spend more on defence.
While not on the summit’s offi- cial agenda, European leaders will voice their trade concerns to Trump, diplomats said.
Trump is then due to visit Britain where he will meet Prime Minister Theresa May — as well as Queen Elizabeth — before flying to Helsinki to meet Russian President Vladimir Putin.
In June, the British leader warned both Trump and EU leaders of the dangers of entering a tit-for-tat trade war.