European Union ready to react as trade dispute with U.S. intensifies
Bloomberg News
BRUSSELS –– The European Union says it will continue escalation in its trade dispute with the U.S. while countering President Donald Trump’s assertion that the U.S. is being treated unfairly by the 28-nation bloc.
Jyrki Katainen, the EU commissioner who is in charge of jobs and growth, told French newspaper Le Monde in a story posted Saturday that if Mr. Trump applies new tariffs to European cars, the bloc “again, would have no choice but to react.”
The EU imposed tariffs on $3.3 billion worth of American products this week in response to duties on its metals exports. The commission, the EU’s executive arm, said that the $1.2 trillion euros in commerce between the EU and U.S. is equitable, and it disputed Mr. Trump’s assertion that the EU needs to be punished because of unfair trade practices, according to an internal EU memo obtained by Bloomberg.
The U.S. had a surplus in services trade with the EU of $45 billion in 2017, according to the memo, citing U.S. statistics. The memo also said the EU is the largest investor in the U.S., accounting for 72 percent of inward direct investment. EU-headquartered companies employed 3.2 million people in the U.S., too.
Including trade in goods, services and primary income from investments, the U.S. runs a $14 billion surplus with the EU.
“Based on the Tariffs and Trade Barriers long placed on the U.S. and its great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Mr. Trump tweeted.
The European tariffs target politically resonant products, including 25 percent duties on Harley-Davidson motorcycles, Levi jeans and bourbon. The countermeasures, enacted Friday, hit U.S. consumer, agricultural and steel products in many key Republican constituencies, putting pressure on Trump before the midterm elections in November.
“Members of U.S. Congress, from both parties, don’t necessarily share the views of the president, nor does the private sector,” Mr. Katainen told Le Monde. “Once the measures start making an impact, the pressure will mount.”
Mr. Katainen’s statements came before Mr. Trump lobbed new threats at U.S. trade partners.
Mr. Trump said Sunday on Twitter that the U.S. is “insisting” that countries remove “artificial” trade barriers and tariffs on U.S. imports to their countries “or be met with more than Reciprocity by the U.S.A.” He said “Trade must be fair and no longer a one way street!”
Before the European Union began imposing tariffs last week, China, India and Turkey had already begun penalizing American products in response to the U.S. tariffs on metals.
If the trade rift doesn’t worsen, the damage to the overall economy will likely be modest, said Mark Zandi, chief economist at Moody’s Analytics. But no one can say that the economic harm will end soon.