Possibility of Trade War Looms as U.S. Delays Negotiations with China and Europe
Late Monday night, the White House declared that the deadline for the imposition of tariffs on European and Chinese goods would be pushed back by 30 days, creating more time for negotiations. The decision came after a frantic scrambling by many countries to attempt to receive exemptions from the upcoming protectionist policies of the Trump Administration. Despite the short delay, a trade war between the world's major powers appears likely.
The U.S. Department of Commerce first announced the plan to create a 25% tariff on steel and a 10% tariff on aluminum back on March 18, and was met with a resounding pushback from the global community. On Tuesday, these trade policies were set to go into effect, with the only original countries exempt being Canada and Mexico.
At the current moment, heated negotiations are occurring with numerous world powers, most notably the European Union and China. A small group of countries were able to gain exemptions from the steel and aluminum tariffs, including Argentina, Australia, South Korea, and Brazil. However, even close allies like the Germans and the French, have had no luck convincing Mr. Trump to spare them from these harsh measures.
China, along with many other countries that will be affected by the incoming tariffs, has prepared a harsh response for the protectionist policies of the White House. The Chinese have drafted their own list of planned tariffs, which will put taxes on fruit, wine, scrap metal, and pork. These taxes have the potential to reach almost 3$ billion in U.S. products and will be especially punishing to the pork industry, who has China as one of its largest suppliers.
The European Union has also threatened retaliation if the tariffs are put into place. A statement by the German government, along with the governments of France and England, declared that, “the European Union should be ready to decisively defend its interests within the framework of multilateral trade rules.” This statement echoed the opinion of David Sullivan, the EU Ambassador to the U.S., who said that Europe was weighing its options, “including the possibility of imposing rebalancing counter-tariffs on equivalent U.S. exports.”
The White House continues to be adamant about the need for harsh tariffs. President Trump, in a meeting with President Emmanuel Macron of France on April 24, said that, “the Union is very tough for us. They have trade barriers that are unacceptable.” Steve Mnuchin, the U.S. Treasury Secretary, also supported Trump’s tough policies, and declared that the 30 day extension on negotiations will allow for some, “very frank discussions” with representatives from China and the EU.
The short extension announced on Monday night is all that stands between friendly U.S. trade relations and a global trade conflict. If the Europe and China are not able to find common ground with the United States soon, the consequences for international markets could be serious. It may already be too late to come to an agreement for China, who has long been the focus of President Trump’s ire. However, the European Union, and other close American allies like Japan, still are desperately seeking to put an end to Trump’s protectionist tariffs before they have a chance to begin.