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The European Union Gears Up for a Trade War With President Trump

The European Union has said that they will respond “firmly” if President Trump goes ahead with planned tariffs for metal imports. Trump announced on March 1 that starting this week, the U.S. will be imposing tariffs on steel and aluminium imports, 25 percent and 10 percent, respectively.

 President Donald Trump. Source:  Michael Vadon/WikiCommons

President Donald Trump. Source: Michael Vadon/WikiCommons

In response, EU officials are considering implementing their own tariffs to even the playing field. The EU may introduce duties of 25 percent on $3.5 billion of U.S. goods (one third steel, one third industrial goods, and one third agricultural).

Speaking on German television, European Commission President Jean-Claude Juncker said: “We will put tariffs on Harley-Davidson, on bourbon and on blue jeans—Levis,” taking a direct hit at some of the most iconic U.S. exports.

“We would like a reasonable relationship to the United States, but we cannot simply put our head in the sand,” he continued.

Trump took to twitter in response to the concerns surrounding his decision.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” the president wrote on Friday.

He added, “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore—we win big. It’s easy!”

 US President Donald Trump meeting with European Commission President Jean-Claude Juncker and European Council President Donald Tusk in May 2017. Source:  Shealah Craighead/US-UK Embassy

US President Donald Trump meeting with European Commission President Jean-Claude Juncker and European Council President Donald Tusk in May 2017. Source: Shealah Craighead/US-UK Embassy

Critics of the decision have condemned the aggressive and wide-reaching nature of Trump’s tariffs. Rather than introducing duties on particular products (like the one President Obama imposed on cold-rolled steel in March 2016), the president has decided to apply them across the board on all steel and aluminium.

Many believe that these new tariffs will have little effect on China (the country Trump has been most concerned about since day one of his bid for presidency), as they supply just 2.9 percent of US steel imports. Instead, it will be Canada (16.7 percent) and Brazil (13.2 percent) that will be hit hardest, as well as numerous other countries that will be forced to absorb the shockwaves of this shift in global trade.

The EU has already begun looking into safeguarding measures (previously implemented in 2002 after then U.S. President George W. Bush set up steel import duties) that will help protect against the high number of imports redirected from the U.S. towards European countries once Trump’s tariffs go into effect.

Last week’s events once again highlight key differences in ideology between the EU and America’s president when it comes to economics. The EU takes seriously its position as a global alliance, bringing different countries together under collaborative economic policies. The organization has recently sealed an agreement with Japan as part of a trans-Pacific trade deal.

Trump, on the other hand, was elected on the promise of his protectionist values: the president has made clear his views on international trade deals and the way in which he believes they damage America’s economy.