Published: Sat, July 28, 2018
Money | By Ethel Goodwin

New US-EU trade deal puts brakes on escalating tension

New US-EU trade deal puts brakes on escalating tension

After a meeting at the White House with the President of the European Commission, Jean-Claude Juncker, Trump said the EU would buy larger quantities of USA soybeans and work with Washington to cut other trade barriers to zero.

After a meeting at the White House, Mr Trump and European Commission president Jean-Claude Juncker said the talks would also seek to "resolve" U.S. tariffs on steel and aluminium and Europe's retaliatory duties - marking a step back from Mr Trump's import protections for United States metal producers.

President Donald Trump's meeting with European Commission President Jean-Claude Juncker on Wednesday was expected to be contentious, coming less than two weeks after the former called the EU a "foe" that "clobbered" the US on trade.

Despite the fact these tariffs could end up remaining in place, Juncker offered to review all existing tariff measures, including 10% duty imposed on USA vehicle exports to the European market, one of Trump's obsessions.

The president also talked of imposing 20 percent tariffs on European cars imported to the USA, causing Juncker to consider further retaliatory tariffs, totaling $20 billion.

"I've made perfectly clear that any time China is willing to seriously negotiate - and we're talking about a commitment to reduce the bilateral trade deficit as well as to deal with technology issues - we're available any time", he said.

Under the deal, the U.S. and the European Union will work together towards zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods.

From the National Association of Farm Broadcasting News Service.

These comments contrasted greatly with comments out of Berlin, where the spokesman for Chancelor Angela Merkel welcomed the "constructive" meeting.

President Donald Trump claimed Thursday he has "opened" European markets for U.S. agricultural products, touting himself as a champion of skeptical American farmers.

Auto tariffs would escalate global trade tension dramatically: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts - figures that dwarf last year's $29 billion in steel and $23 billion in aluminum imports. Beijing knows that China is the single largest importer of USA soybeans, and that about 96 percent of US soybeans are grown in 18 states - all but two of which voted for Trump in 2016.

Restrictions on the United States farmers' largest export market have caused sales and prices to drop, as China reached out to Brazil and Argentina to replace U.S. soybean imports.

He has slapped taxes on imported steel and aluminum, saying they pose a threat to USA national security. "And, we appreciate that he has recognized our loss in exports and lower prices and provided some immediate relief".

Commerce Secretary Wilber Ross claimed Trump's climb-down and Europe's promise to hold trade talks and to import more soybeans as a victory.

Likewise, the anti-Chinese tariffs of the Trump administration have proved highly unpopular among most of America's large, medium and small businesses while consumer advocacy groups have warned that for most Americans, the tariffs are nothing more but an excessive take on must needed items. "The EU continues to stand up for free and fair trade".

One thing all analysts can probably agree on - do not count your trade truce chickens just yet. So the Chinese are buying up all the Brazilian and Argentinian soybeans they can in the interim, leading to expectations that the European Union would buy more from the U.S. Still, the EU's purchases won't come close to making up for Beijing's cutback in purchases of U.S. soybeans.

On Tuesday, the White House announced US$12 billion (S$16.3 billion) worth of aid for farmers affected by retaliatory tariffs.

U.S. President Donald Trump suddenly seems to be a big fan of dropping all "tariffs, barriers and subsidies" with at least one trading partner, mere hours after he tweeted "tariffs are the greatest".

His state has also been affected by retaliatory tariffs from the European Union on bourbon, and Barr said he didn't feel satisfied by the amount of specificity in Thursday's briefing on whether that would also be resolved soon.

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