Trump aims trade offensive solely to China, renews truce with EU

Last Monday 10 September Cecilia Malmström, Member of the European Commission in charge of Trade received in Brussels Robert Lighthizer, the US Trade Representative. (© European Union EC- Audiovisual Service)

US President Donald Trump’s thundering trade salvos now seem to be concentrating exclusively against China. This week’s cannonade though didn’t remain unanswered. On Monday, the Chinese Foreign Ministry spokesman, Geng Shuang, said “China will inevitably take countermeasures to resolutely protect our legitimate rights”. On Friday 7 September, the ‘America first’ ex TV celebrity aboard ‘Air Force One’ added up his threats for super tariff levies on top of the already imposed import taxes on Chinese goods, summing it up to $200 + 267 + 50. The total exceeds what China exported to the US last year.

On top of that, he ‘advised’ the largest company of the world, the $1 trillion capitalization tech giant ‘Apple’, to abandon its Chinese production structures and “start building factories in America”. On the contrary, during the last few days his attitude towards the European Union appears much more controlled. But let’s take one thing at a time, starting from perennial China and the vast American investments there. ‘Apple’ spearheads the US comprehensive presence in the huge economy.

Instructing Apple

Some days ago, the American tech giant sent a letter to the US Administration, saying that the White House trade policies towards China are to affect the American consumers, who will be obliged to pay more for the company’s products “including the Apple Watch”. Over the past years, the company has developed complex production structures in China and more generally in South-East Asia.

Trump’s ‘advice’ to the most valuable US trade name came after the delivery of that letter. It’s at least unusual and against the American political tradition for the White House occupant, to ‘instruct’ the country’s big businesses on their production/commercial strategies.

In a separate development, the White House seems to bring down the tones in its trade skirmishes with the European Union. Last Monday, the EU Trade Commissioner, Cecilia Malmström received the United States Trade Representative, Robert Lighthizer in Brussels.

For one thing, this meeting revitalized the Trump-Juncker agreement for a trade truce and consultations. To be reminded, at the end of last July the American President and the President of the European Commission surprised the world by reaching a cordial armistice about their trade differences.

Caressing Europe

After that thought, Trump again raised the tones in August. He once more threatened the European cars with tariffs of 25%, which he had just agreed with Juncker to at least defer for some months and, in any case, after detailed discussion. Besides that, towards the end of August, the US President personally and swiftly rejected a Malmström statement for zero tariffs on cars imported by both sides.

This White House reaction was awkward for two reasons. For one thing, Malmström’s proposal should have been answered by her homologue, Robert Lighthizer. Secondly, and more importantly, the zero tariff option was a Trump idea proposed to the German automotive companies through the US Ambassador in Berlin.

Atlantic peace

In such an environment, the latest gathering of Malmström and Lighthizer in Brussels was already some notches cooler from Washington’s aggressive tactics. The two top trade officials were supported by their full teams. This was another indication of the importance of their meeting. In any case, the US and the EU seem to have achieved a full strategy to solve their differences in that Monday gathering. The two trade heads agreed to meet again before the end of this month.

As it became clear, lower officials have taken over the negotiations. According to Lighthizer’s office, trade experts will meet again in October “to identify tariff and non-tariff barriers”. Then, in November, the top trade representatives will wrap up the results.

In short, this is a full ‘corridor’ for the US and the EU to settle their trade differences. More precisely, Washington and Brussels say they are about to settle their confrontation in the automotive sector. Evidently, the car chapter is the most important item, in the long catalogue of differences between the two shores of the Atlantic Ocean.

Pacific Ocean on fire

At a time when the US President is aggressively intensifying the rhetoric against China to unprecedented levels, an Atlantic conciliation may be a sure indication of what is going to follow over the Pacific Ocean. Yet, despite Trump’s arithmetic being so threatening, Beijing seemingly doesn’t want to be seen as following a ‘quid pro quo’ tactic in fueling its conflict with Washington. So, against the coming US tariff package on Chinese goods of a value of $200bn, Beijing says it prepares responsive action not exceeding $60bn.

Unquestionably, if things get out of control in the Pacific, it will be Washington to blame. Practically all the American tech giants strongly oppose Trump’s trade policies.

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