Trump and EU leader make pact in trade war
WASHINGTON — President Donald Trump and European Union leader JeanClaude Juncker agreed Wednesday to a trade war cease-fire under which the administration would back away a threat to impose high tariffs on imported cars and rethink duties already placed on imported steel and aluminum.
In return, the EU will make unspecified purchases of U.S. soybeans and liquefied natural gas, the president said.
After a White House meeting, the two men also vowed to work toward eliminating all tariffs on many industrial goods, a resumption of dialogue that could help repair fractured relations between the longtime allies.
Even the limited deal was welcome news to those concerned that Trump’s trade policies are causing instability and uncertainty for the global economy. The U.S. and EU have a $1 trillion bilateral trade relationship, the largest in the world. Stock futures surged Wednesday afternoon on news of the agreement, despite the lack of details or firm commitments.
Just days after Trump called the EU a “foe” on trade, he spoke of the “close friendship” with the 28-nation pact and predicted a “new phase in the relationship between the United States and European Union.”
Trump said neither side would impose new tariffs as long as talks continued.
In addition to dropping his threat to impose 20 percent tariffs on imported autos and auto parts, Trump promised to “resolve the steel and aluminum tariff issues.” Trump earlier this year imposed steep tariffs on imported steel and aluminum, which prompted the counter-tariffs from the EU.
As part of the deal, Europe promised to buy an unspecified amount of U.S. soybeans and build more terminals to import liquefied natural gas. More soybean purchases, which Trump said would start “almost immediately,” would bring relief to farmers in politically key states who have been hurt by retaliatory tariffs, especially from China. On Tuesday, Trump announced a $12 billion aid program to help American farmers hurt by Trump’s trade war with China.
Juncker said Europe looked forward to bolstering cooperation with the U.S. on energy. “This is also a message for others,” he said, an apparent reference to Europe’s current reliance on Russian energy imports.
“I had the intention to make a deal today,” Juncker said. “And we made a deal today.”
Analysts described the meeting as moderately successful, especially given the low expectations on both sides of the Atlantic.
“Juncker didn’t come to reset relations or to have some massive 2.0 (trade) plan,” said Bart Oosterveld, director of global business and economic programs at the Atlantic Council. “His mandate was to stop the bleeding, and that’s what may have happened.”
Philip I. Levy, senior fellow at the Chicago Council on Global Affairs, said the early reports from the meeting sounded “just like the kind of agreement reached with China last year — some purchase promises and a pledge to talk more.”
“In China’s case, that led to trade war, not trade peace,” Levy said. “The warming of relations and any delay in additional protection would be welcome, but this does not seem like a lasting solution to the president’s tweeted concerns.”
Trump has repeatedly complained about the EU’s merchandise trade surplus of about $150 billion with the United States, and in particular has targeted Germany and its auto industry.