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Peanut butter and bourbon: The US and EU are on the verge of a tit-for-tat trade war

Donald Trump’s administration has vowed to unveil new tariffs on steel and aluminium over the coming days.

File photo
File photo
Image: Bodnar Taras via Shutterstock

WASHINGTON AND THE European Union – the world’s two largest economies – were on an accelerating collision course today as Donald Trump’s administration vowed to unveil new tariffs on steel and aluminium within days, and Brussels readied to retaliate.

As the White House forged ahead with Trump’s nationalist economic agenda – triggering howls of protest from fellow Republicans, a walkout by a top presidential aide and a market sell-off – European leaders warned the US president against starting a trade war.

The sparring came just six weeks after Trump’s conciliatory words at the World Economic Forum in Davos, where he pledged that his “America First” vision did not mean “America alone”.

White House press secretary Sarah Sanders sought to calm nerves, saying a detailed decision would come by the end of the week on the tariffs – whose sudden announcement by Trump last week opened a chasm among his staff, with economic advisor Gary Cohn quitting yesterday following a pitched internal battle.

With Cohn’s exit reverberating through global markets fearful the world could backslide on trade, Trump Cabinet members appeared on television to make the president’s case, with Commerce Secretary Wilbur Ross insisting the US was not “looking for a trade war”.

“We’re going to have sensible relations with our allies,” Ross told CNBC, claiming Trump’s policy was well “thought through”.

Brussels

But in Brussels, the bloc wasted no time in outlining planned retaliatory measures on targeted American exports – from steel, industrial and agricultural items to flagship products such as jeans and motorbikes, peanut butter and bourbon – to be rolled out if the US makes good on its threat.

“Trade wars are bad and easy to lose,” EU President Donald Tusk told a news conference today, directly rebuffing Trump’s assertion last week they were “good and easy to win”.

Warning of “a serious trade dispute” between Washington and the rest of the world, Tusk said leaders of the bloc would hold emergency talks on the issue on 22 and 23 March.

EU Trade Commissioner Cecilia Malmstroem doubled down, saying a full-on transatlantic trade war was “not in anybody’s interests”.

“A trade war has no winners,” Sweden’s Malmstroem told reporters after the European Commission discussed the tariffs.

“We should be very careful with that word… there are only losers in that, and that’s why we will respond in a proportionate and balanced way.”

‘Thousands’ of jobs at risk’

The EU is holding fire on its reprisals for now – as Trump has yet to sign into effect his aggressive plan, having floated 25% tariffs on steel and 10% on aluminium to correct what he calls unfair competition for US industry.

But a hit list of targeted US exports has been drawn up. European Commission chief Jean-Claude Juncker had threatened to hit big-name US brands such as Harley Davidson motorbikes and Levi’s jeans with import duties, prompting Trump to fire back a threat to tax cars from the EU.

Despite Juncker’s headline-grabbing threat to iconic brands, the EU’s list, written in the dry language of customs regulations, does not mention specific businesses.

Obtained by AFP, the list includes “men’s or boys’ trousers and breeches of cotton denim” and “motorcycles including mopeds” with engines of 500 cc capacity and above – which includes Harley Davidson models.

Sweetcorn, cranberry juice and peanut butter are all featured along with cigarettes, cigars and playing cards.

Malmstroem said the EU was still trying to persuade Washington not to go ahead with the tariffs, which she said would threaten “thousands of European jobs”.

The EU is also looking at “safeguard” measures to protect its own industry – restricting the bloc’s imports of steel and aluminium to stop foreign supplies flooding the European market, which is allowed under World Trade Organisation rules.

Juncker, who today met Lakshmi Mittal, the boss of the world’s top steelmaker ArcelorMittal, said last week the EU would “react firmly” to protect European industry.

Europe exports around €5 billion worth of steel and €1 billion worth of aluminium to the US each year, and the commission estimates Trump’s tariffs could cost some €2.8 billion.

© – AFP 2018

Read: Leo: ‘There are many of Donald Trump’s policies with which I do not agree’

More: Trump steps up trade threats as economic advisor Gary Cohn resigns in protest

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