US-EU trade war: Berlin fearful of the second round

Press conference by Cecilia Malmström, Member of the European Commission, on the US restrictions and tariffs on steel and aluminum imports, affecting the EU. Date: 01/06/2018. Location: Brussels, Belgium. © European Union, 2018/ Source: EC – Audiovisual Service.

Finally, Trump did it. He declared war against his country’s closest and more loyal allies Canada, the European Union and Mexico. In the case of the EU though, things may be more complicated than the super tariffs on steel and aluminum products of 25% and 10% respectively, imposed as from 1 June by the US on the relevant imports.

The importance of the products penalized per se is minimal. They barely represent half a percentage unit of the club’s GDP. Nevertheless, Europe expects the American tariffs to divert the excessive flows of steel exports from overcapacity countries like Turkey, Brazil and of course China to be directed towards the EU market. There is more to it. The US tariffs expose some hidden disparities between the club’s members.

France and Germany divided

This newspaper has extensively reported on the differentiation of the German and French approach, regarding the retaliation after the steel and aluminum tariffs imposed by the Americans. On 10 May the European Sting leader said “The EU response to the American attack, has seriously divided the Brussels bureaucracy because of the completely different lines adopted by France and Germany. Paris is favoring an all out counterattack …While Berlin begs for moderation and bargaining about tariffs on cars and other engineering manufactures…In this way, France blocks a possible EU-US compromise about tariffs that Germany can tolerate”.

This is quite understandable. Germany is by far the largest exporter to the US, so Berlin would go for a compromise albeit painful as long as car exports are less touched. For Germany Mercedes-Benz, BMW and VW car exports to America must be saved at all costs, given their exceptional weight in the country’s economy and foreign account. More so, because there are alarming news coming from across the Atlantic Ocean. The White House has asked the American administration to search, if car and track imports are threatening the national security of the US. It’s exactly the same 1962 legislation, which the US used to impose the 25% and 10% tariffs of steel and aluminum imports.

Furious Trump

Last week, more clouds gathered over the North Atlantic. The prestigious German weekly business news magazine ‘Wirtschaftswoche’ reported that, more than one American unnamed sources said Trump is furious with German cars. He reportedly said he will hunt the luxury German car imports in the US, “until there are no Mercedes-Benz rolling down New York’s Fifth Avenue“. According to Reuters in relation to this report “a United States Embassy spokesman in Berlin referred questions to Washington”. The refusal of the embassy to refute the allegation may mean a lot.

What ‘Wirtschaftswoche’ wrote about Trump’s fury with Germany is not at all secret. When the German Chancellor Angela Merkel first visited Washington on 17 March 2017 after Trump’s inauguration, she was taken aback hearing her host say in reference to the existing trade deals, “Germany had done a much better job than the negotiators for the US and we have to even that out, not to win just want fairness”. On the same occasion – their joint Press conference in the White House- Trump went as far as to ask Germany to pay hundreds of billions to NATO and the US. He thus calculated the theoretical arrears Germany’s owes because of her failure to spend 2% of GDP on defense.

Penalizing Germany

The US is systematically discriminates against Germany. Take the case of Deutsche Bank, which has been hit hard by the US authorities. They reduced it to a more or less bankrupt small bank, from the global investment banking leader it was. Actually, Deutsche is currently abandoning its high flying investment banking altogether, laying off more than ten percent of personnel and closing down important outlets in order to survive. According to German financial reports, the bank is thinking of returning to retailing and other standard banking activities.

Given that Brussels has already prepared the package of retaliation penalizing the imports of some American products, it will be very interesting to see how Washington is to reply to that. Surely, there will be a second round in this catastrophic trade war exchange. This is what makes Berlin quite anxious.

A moderate EU response

In detail, as from July, the EU is planning to levy super tariffs on the imports of a number of US products, ranging from bourbon whisky, orange juice and dried fruits to Harley Davidson bikes of a total value of €2.8 billion. This sum is quite trivial compared to the value of goods the two sides trade every year, reaching hundreds of billions of euros and dollars. The EU’s response is obviously planned to be restricted, in the hope things to end there. But there is no doubt there will be a second round in this affair. Trump has promised it.

So the value, and most importantly, the selection of the European products to be punished, in the highly possible secondary US salvo will be characteristic of the American intentions. If they target the automotive sector, then Germany should expect more troubles with Trump’s White House.

Already, Washington is searching for the ‘threats’, the imports of Mercedes, BMWs, VWs and Audis represent, for the national security of the US. Very few think the results will ‘acquit’ the German cars.

 

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Food safety critical to development and ending poverty: FAO deputy chief

Free flow of non-personal data: Parliament approves EU’s fifth freedom

Eurostat overturns Commission’s assessment of the economy

1 in 7 people would choose not to fly because of climate change

Here’s how tech is revolutionising transport for low-income communities in urban Africa

3 ways to fix the way we fund humanitarian relief

Debunked: 5 myths about the future of work

EU Parliament semi worried over democratic deficit

Mental health of health professionals: the alter ego

The battle for the 2016 EU Budget to shake the Union; Commission and Parliament vs. Germany

Robots will soon be a necessity but they won’t take all our jobs

The reason the world showed limited empathy to the Orlando victims

Germany resists Macron’s plan for closer and more cohesive Eurozone; Paris and Berlin at odds

Remembering Kofi Annan

Lack of basic water facilities risks millions of lives globally: UN health agency

How privacy tech is redefining the data economy

Recognize, celebrate and ‘stand in solidarity’ with persons with albinism

The hostilities in south and eastern Ukraine resume; where could they lead?

LEAGUE OF YOUNG VOTERS LAUNCHES TOOL FOR YOUNG PEOPLE TO COMPARE POLITICAL PARTIES AHEAD OF EU ELECTIONS

UN appeals for international support as flood waters rise in wake of second Mozambique cyclone

90% of plastic polluting our oceans comes from just 10 rivers

The European Sting writes down the history LIVE from G20 Leaders’ Summit in Turkey

‘No-deal’ Brexit preparedness: European Commission takes stock of preparations and provides practical guidance to ensure coordinated EU approach

Ercom, cutting-edge Telco solutions from Europe

The Fourth Industrial Revolution must not leave farming behind

Mosul’s ‘3D contamination’ adds to challenges of deadly mine clearance work

Ship Recycling is the Commission’s Titanic

UN refugee agency presses States to aid 49 refugees stranded on Mediterranean

COP22 addresses a strong global pledge to effectively implement the Paris Agreement

EU is not only obsessed with Facebook but also blaims now innocent websites using social plugins to serve democratic dialogues?

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

EU revengefully shows no mercy to Cameron by demanding a fast and sloppy Brexit now

China is a renewable energy champion. But it’s time for a new approach

Alarming number of Ebola deaths in DRC a ‘rallying cry’ to scale up treatment

Parliament to ask for the suspension of EU-US deal on bank data

Europe plans to send satellites into space to monitor CO2 emissions

We are ‘burning up our future’, UN’s Bachelet tells Human Rights Council

Greece did it again

It’s time for global businesses to accept local responsibility

Belgium: Youth Forum takes legal step to ban unpaid internships

CO2 can be a valuable raw material, not just a climate killer. Here’s how

The US calls off globalization, targets Germany. Paris offer to Berlin comes at a cost

‘Once-in-a-generation opportunity’ will be squandered, warns Guterres, unless social, economic, environmental challenges are met

Assembly of European Regions @ European Business Summit 2014: Made in Europe – Made of Regions

Humans aren’t made for repetition – it’s time AI took over manufacturing

Are e-cigarettes as safe as they claim to be?

Boat made of recycled plastic and flip-flops inspires fight for cleaner seas along African coast

Cyclone Idai: emergency getting ‘bigger by the hour’, warns UN food agency

OECD Secretary-General Gurría welcomes announcement of new trade agreement between the US, Mexico and Canada

Rule of law in Hungary: Parliament should ask Council to act, say committee MEPs

Implementation of tax transparency initiative delivering concrete and impressive results

UN civil society conference to focus on sustainable solutions for challenges of urban life

State aid: Commission approves €431 million public support for cleaner transport in German cities

OECD, UN Environment and World Bank call for a radical shift in financing for a low-carbon, climate-resilient future

Why schools should teach the curriculum of the future, not the past

Brussels to tear down the trade wall with Mexico as opposed to Trump’s “walls”

Shanghai has tough new recycling rules – and it will stop collecting trash from communities that don’t comply

8000 young people in the EP in Strasbourg: “a breath of fresh air for EU democracy”

Is Erdogan losing game and match within and without Turkey?

This tiny new grain could save the planet

More Stings?

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