Trump’s trade wars: Aiming at long term gains for America

On 21 March US President Donald Trump signed a Presidential Memorandum targeting China and demanding “a true reciprocal trade agreement”. (Official White House, photo by Shealah Craighead).

Last Friday, President Donald Trump again surprised  the world by imposing new import tariffs on Chinese products of a value of $60 billion and deferring the imposition of import super levies on European Union steel and aluminum for 1st May. In the latter case he also postponed the new tariffs for another six exporting countries (Argentine, Australia, Brazil, South Korea, Mexico and Canada).

In this matter, the US has accorded the benefit of doubt to America’s closest allies. Given that, it’s obvious that the White House chose to single out and target China. It said the US will also greatly restrict and possibly fully block the transfer of American technology to this country and rigorously screen the acquisition of US assets by Chinese interests.

Stocks felt the heat

Despite the fact that those decisions by the President of “Make America Great Again” were rather less severe than his rhetoric meant, capital markets all over the world considered them as quite dangerous. Stocks were further depressed in all major markets and the usual safe havens like bonds gained grounds. The impact was more severe for the Tokyo Stock Exchange.

The Nikkei – 225 stock index lost 4.51% in a few hours, mainly because Japan was not excluded as the European Union (28 countries) and the other six exporters from the tariffs of 25% and 10% respectively, on steel and aluminum imports. The new import levies on those products started being imposed by the US customs authorities as of 00.01 hours last Friday.

The EU to be scrutinized

Regarding the deference of tariffs on steel and aluminum for the 28 countries of the European Union plus the other six, Washington has a twofold target. Firstly, for at least some time it wants to punish only Chinese exports. On the other hand, Washington seems ready to press hard the Europeans for a major overhaul of their trade relations. The EU will very probably be asked to reduce its own import taxes on American products in return for a permanent exoneration from the steel and aluminum super levies.

More importantly, Brussels will also be asked, even blackmailed, to reduce or abolish its non tariff barriers to imports. It’s about the complex EU edifice of detailed and in cases peculiar product specifications or other characteristics related to health and environmental issues that imported goods have to respect. In this context the European automotive market and the agro-food sector will be the first to feel the pressures of the American negotiators, asking for detailed ‘disarmament’ of the alleged unfair internal EU market protection with non-tariff measures.

Presidential Proclamations

Trump is quite clear on that in signing the relevant Presidential Proclamation on 22 March entitled “Adjusting Imports of Aluminum into the United States” which exempts the EU from the new levies. A twin Proclamation was signed for steel. Then, the White House issued a statement saying “By May 1, 2018, the President will decide whether to continue to exempt these countries from the tariffs, based on the status of the discussions. The European Union will negotiate on behalf of its member countries.”

In short, the temporary exemption of the EU from the steel and aluminum tariffs is just an obliging gesture. During the next two months the Europeans have to accept deep changes in their trade relations with the US. Washington is determined to overhaul the trade over the Atlantic, to the detriment of the eastern shores of the Ocean. Nothing will be as before. The same is true for other great Ocean, the Pacific.

Chinese moderation

Even before Trump announced the new tariffs on Chinese products and the other restrictions on Chino-American economic relations, Beijing had stated it will retaliate by imposing extra import taxes on US products. However, in comparison to Washington’s tariffs on Chinese goods of $60bn, the Chinese trade authorities restricted their own action only on American products of a value of just $3bn. This is visibly a gesture of good will and seemingly Beijing will be happy if this tit for tat stops here.

All in all, Trump’s trade wars have started in earnest. The truth is, though, that Washington’s action is less aggressive than the Presidential rhetoric connoted. During the next few weeks it will become clear if the administration’s moderative approach is to prevail. In any case, stock markets felt the heat last Friday. The bubble-like pricing levels there don’t seem able to withstand even the slightest tremor. But this is another story, as Rudyard Kipling would have said.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

This is how much people would pay to use some of the world’s most popular apps

Why the UN is investigating poverty in the United Kingdom

THE COMMITTEES: ‘All roads lead to the Fifth’

EU migration deal welcomed by UN agencies

World Maritime Day: Commissioner Vălean calls for support and safe return of seafarers

To solve the climate crisis, we need an investment revolution

Eurozone economy desperately needs internally driven growth

Autonomous vehicles could clog city centres: a lesson from Boston

“Decent working conditions for the young health workforce: what are the challenges and can we find solutions?”

“A global threat lies ahead worsened after the EU’s green light to the Bayer-Monsanto merger”, a Sting Exclusive by the President of Slow Food

Brexit poses ‘particular risk’ to British people in poverty: UN independent expert

A digital tax sounds like a great idea. Here’s why it might not be universally popular

5 ways urban transport could step up a gear for women

Drugs cost too much. There is a better way to fund medical innovation

Boris ‘single-handed’ threatens mainland Europe; can he afford a no-deal Brexit?

Tragedy of Mediterranean deaths continues, as seven drown, 57 rescued: UN migration agency

Act now to end violence, Zeid urges Nicaraguan authorities

A Sting Exclusive: “Cybersecurity: Why consumer products must be looked at urgently”, by BEUC’s Deputy Director General

Banks promise easing of credit conditions in support of the real economy

DR Congo: ‘New waves of violence’ likely, UN warns, unless State acts to prevent intercommunal reprisals

Ebola: EU announces new funds to strengthen preparedness in Burundi

Victims of terrorism remembered

Varna (Bulgaria) awarded European Youth Capital 2017

The European Sting @ Mobile World Congress 2014, Creating What’s Next for the World. Can EU Policy follow?

ECB’s billions fortify south Eurozone except Greece; everybody rushes to invest in euro area bonds zeroing their yields

People, not technology, shape the future of manufacturing

Parliament in favour of lifting visa requirements for Kosovars

Africa Forum aims to boost business, reduce costs, help countries trade out of poverty

EU and Australia launch talks for a broad trade agreement

The horrific trend of the anti-vaccine movement in Turkey

FROM THE FIELD: Going the extra mile with vaccines

Luxembourg has achieved high levels of growth and well-being but must do more to preserve and share prosperity

Reducing deforestation means getting serious about environmental crime

Entrepreneurship and strategic planning: the enabler

4 simple ways to make your holiday season more sustainable

Yanukovych attempts a violent and deadly cleansing of Kiev’s center

‘Revved up climate action’ needed to counter ‘prolonged’ and deadly storms like Cyclone Idai: Guterres

Here are 10 of the most urgent health challenges we’ll face in the 2020s, according to WHO

Women Win in the West

This wall of shoes is for the women killed by domestic violence

School closures triple in Central and Western Africa as education comes under fire

COP25: Global investors urge countries to meet climate action goals

Coronavirus (COVID-19): truth and myth on personal risk perception

Why building consumer trust is the key to unlocking AI’s true potential

UN’s Grandi slams ‘toxic language of politics’ aimed at refugees, migrants

Budget MEPs approve €104.2 m in EU aid to Greece, Spain, France and Portugal

UN experts decry torture of Rakhine men and boys held incommunicado by Myanmar’s military

Can free trade deliver cheaper renewable energy? Ask Mexico

How private investment can boost education access and quality in the digital economy

A top economist shares 3 ways leaders can help economies recover

This AI trash can is designed to stop you wasting food

4 essential qualities for digital leaders

MWC 2016 LIVE: Ford trumpets new in-vehicle system, “fundamentally rethinks” transportation

MEPs question whether the new Migration Pact will bring about real change

Force used against protestors in Gaza ‘wholly disproportionate’ says UN human rights chief

Compensation for damages by the State for infringement of EU law: the European Commission refers Spain to the Court of Justice for its rules on the compensation for damages incurred by private parties

Gender is where the feminist and LGBTI movements meet. Here’s why

UK economy in dire straits: leading banks now officially plan to Brexit too

European Parliament the most trusted EU institution

Refugee crisis update: EU seeks now close cooperation with Africa while Schulz is shocked to witness live one single wreck full of immigrants

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s