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The US plans to impose tariffs on European steel and aluminum after threatening the EU with this move for months, the Wall Street Journal reported on May 30 quoting sources aware of the issue.
According to the WSJ, Washington is expected to announce its decision on May 31.
In March, US President Donald Trump imposed news tariffs of 25 % for steel and 10 % of aluminum. The EU and other allies were promised temporary exemptions to allow for future negotiations.
On May 30, top trade officials from the US came to Paris to met their EU counterparts and discuss exemptions on tariffs, which expire on June 1. During the negotiations, US Secretary of Commerce Wilbur Ross reportedly hinted that the EU would face tariffs. However, he stressed that Washington intends to discuss a possible deal that opens markets in Europe to US exports.
“It’s not that you can’t talk just because there are tariffs,” Ross said
“God knows there are plenty of tariffs the EU has in place on us.”
European representatives stressed that they plan to impose tariffs on as much as $3.3 billion in US exports. According to rules of the World Trade Organization, members are allowed to punish a country for inappropriately seeking a “safeguard” against their exports.
French Minister of the Economy and Finance Bruno Le Maire stressed that Europe will defend its own interests if Washington imposes tariffs.
“We French and Europeans don’t want a trade war. But if we’re attacked, we will have to defend our interests,” Le Maire said.
The WSJ pointed out that Washington is planning to cancel exemptions now, stressing that tariffs are induced by a threat to the national security.
The EU officials criticized this reason:
“We have not seen any analysis that shows these exports pose a problem to national security,” the EU ambassador in Washington David O’Sullivan said.
“If the United States wants to open discussions on a possible sort of trade deal, we don’t think slapping tariffs on our aluminum and steel exports is a way to start off.”
The discussions were fueled when Ross drew a sharp line with the EU over Chinese trade talks. He stressed that Europe is using tariffs as an “excuse” to refuse trade negotiations.
“China are paying their tariffs,” Ross said.
“China hasn’t used that as an excuse not to negotiate … It’s only the EU that is insisting we can’t negotiate if there are tariffs.”
US officials hinted that the June 2-4 trade talks between China and the US could not happen if the EU and Washington do not reach any agreement on tariffs.
French President Emmanuel Macron stressed that the world’s biggest economic powers should reshape the World Trade Organization rules and prevent growing tensions, according to Reuters. He pointed out that Europe should not show weakness in the face of unilateral action.
“All sides always lose in a trade war,” Macron said.
“The new rules must meet the current challenges of world trade: massive state subsidies creating distortions of global markets, intellectual property, social rights and climate protection.”
“A trade war is always a war lost by everyone.”
As US declares America first, EU should declare EU first. EU is a larger market, has more population and a higher GDP than US.
But US is more efficient market, with greater integration of labor, products and finances – you mentioned GDP, why not GDP per capita? Let’s see how the situation looks there.
US is a consumer importer market, buying tangible goods with printed paper. I do not see how GDP per capital affects the discussion here; “” greater integration of labor, products and finances”……meaning what exactly? It’s a nice buzz word, there is a disparity on the labor market since many manufacturing jobs were outsourced for the last 2-3 decades, most consumer products are imported, and finances, printing paper and creating trillions out of thin air….does not qualify as sound fiscal policy. Creating so much money out of thin air to help the financial industry is a sure sign of “wealth built on meaningless assets”.
Not nice “buzz words”, just you are missing their meaning. GDP per capita (not “capital”) is GDP per citizen – i.e. how efficient is population in generation of added value. Is it now clear or I should explain how it is relevant to the discussion? Greater integration of labor, products and finances. Let’s start with labor: if I live in CA, I can move to TX, getting better wage and/or conditions for my profession, without having any administrative constrains. If you are a Polish worker, moving to Germany – you are allowed to work for certain time (6 months, probably) but then you must get approval from certain governmental body, in order to continue your employment. (do I need to develop this more or you got the point?) If I sell an industrial machine from TX to CA, there are no custom clearance procedures and no related costs. If I do that from Poland to Germany, there are custom clearance procedures, both costing me something and delaying delivery. If I continue to explain like this, it is on edge of insult (to you), so I’ll stop now, hoping you are clever enough.
The states making the United States are regions of the same country, following the same constitution and guidelines of the federal government. Germany and Poland are two different national entities that have two separate cultures, speaking different languages, having their own political apparatus, they are part of the EU, having their own GDP. You want to calculate GDP per capita, each national GDP is applied to its population.
Check this example: of all steel globally produced, 49% comes in form of sheet metal (~30% in form of solids, the rest are directly applied casts/forged forms). The USA has the lead in solid metal machining (HaaS is the top). In sheet metal industrial equipment, Europe has the leading machine producers (Trumpf, Amada, LVD…) and yet top two, out of 3, punch-press tooling producers, are US companies (MATE and Wilson, both in Minnesota) – beside the fact that all these machine producers are also offering their own tools (for their machines). So, how it happen that US companies are leading the market, for consumables used by European machines? Because, the US economy is more competitive. US companies produce them better, cheaper and faster then European competitors – and when it comes to delivery times: they produce that faster, than including time for delivery via TNT/DHL – they are still faster then locally delivered from European companies (to Europe, not only EU).
You are deviating from the scope of the discussion, what does CNC, punch presses have to do with consumer goods that are being used in the US? The tool and die industry was long outsourced to Mexico, and Asia, so what if Haas, Mate and Wilson produce high quality ma one tooling equipment? The tools, dies and fi
But why do you measure economy solely by consumer goods? It is only one portion of the economy. Regarding wages, I really don’t have insight- you would know better. But US is serious industrial producer, and these tools that I mentioned are produced in USA/MN not in Mexico (otherwise I would have huge problem with my customs). You know, you have to define what you are looking at: economy or labor market? I’m arguing that from economy perspective, US is stronger then EU. On labor rights and labor market – I’m not that sure.
Regarding consumer electronics, try this experiment: open your PC (that is made in China probably) and write down code-names of each chip on the motherboard. Then search these chips on google “[chip-codename] datasheet” – and you’ll find that EACH chip is an american chip, just produced in China, but designed, developed and owned by a US company. In my whole experience with electronics, I found just few unpopular chips to be really owned by a Chinese company. What-s the point? Well, while chips and motherboards are produced in China, margins are still collected by US corporations, not Chinese producers, because of intellectual property rights. In that sense, EU and US are incomparable – I found very few chips that are owned by European companies. It is like 90+% US origin, maybe 5% European and the rest could be Chinese.
The USA are the biggest agricultural producer on the planet. The USA is the biggest software licence exporter on the planet. Consumer electronics that you refer to, in its price, has ~30% production costs (collected by China) and 70% of corporate margin, that is collected by US corporation, owning the factory. It is truth that almost none of that money goes back to US, because laws imposed before Trump were making it almost impossible. Now it is changed, and corporate money does come back into US. FED does the printing business, but it is not how US dominates the world – it is just their side remedy for that. If you believe that it is possible that a country just lives from printing money – in such time frame – you have no basic knowledge on economy. If FED prints all that money and you can’t spend it (you say they produce nothing, therefore, in your universe you can’t spend dollars) – USD exchange rate would be 0. If you can’t spend your USD, i.e. it has zero value for you, please send them o me.
I know how the US economy works, I live in the US, after 2008 the FED did everything to encourage economic growth, by several QE’s, buying and unwinding trillions of dollars in derivatives. All the prosperity since 2008 can be attributed to 0 interest rates that fueled the flow of easy money into the financial industry and Wall Street.
“”If FED prints all that money and you can’t spend it (you say they produce nothing, therefore, in your universe you can’t spend dollars) – USD exchange rate would be 0.””
The FED printed easy money that was used to fuel stock market bull run since 2008, money made on the stock market was used to buy high end real estate, and imported goods. The American way is to print money, create artificial wealth that is used to buy tangible goods produced in other countries.
“”The USA are the biggest agricultural producer on the planet.”” Yea, GMO agricultural products. “”The USA is the biggest software licence exporter on the planet. ”” Man shall not live by software alone, software in general contributes to the high levels of mental ineptitude prevalent in western cultures. Besides GMO agricultural products, software, some aircraft and automotive industries and a few other oil drilling technologies….what else does US produce that is of tangible value? Amazon, Netflix, Google, Facebook, Microsoft that are the the largest corporate entities with capital valuation of over 3 trillion, produce nothing tangible.
GMO or not – it is being sold, creating added value. It is not an argument when it comes to the economy. QEs are not the only thing that US does, that was my point. Also, if we compare EU/ECB and USA/FED – ECB is doing QEs as well, so QEs are not a valid argument here. You can’t eat software, but can you live in this world without software? You can’t. Windows is OS on 93% computers on this planet. iOS and MacOS are embedded in consumer electronics China produces – but who collects the licence fee (directly) ? I mean, we are not arguing if USA economy is healthy one, we are arguing if EU has better economy than US — I say: no. EU members are countries and US members are states – of course, that I was my point with “labor, goods and finances” integration, that’s why you can’t say EU economy is stronger then USA – because there is no EU economy (in sense of fully integrated one). If you wire money from TX to CA, it is executed the same day. If I send money from Slovenia to Italy it has to go via SWIFT, which in perfect case, means that the money will arrive in 24h, not 3-4h like in USA. All these factors, make EU economy slower, therefore, less competitive – compared to what you have in the USA. (btw. I live outside USA and EU, just speaking from my experience in international trade since 2002. )
We are first and don’t you forget it. Obama did and look at his failed policies. Only more population because of the influx of immigrants that don’t works that doesn’t count. If their so rich they can start paying more for their defense. Social miscreants to the fullest. More and more and more from the USA
Punitive tariffs have always signalled a bloated nation in decline. More to come I hope :)
This is a mistake, but I sure Trump will be talked out of it by his advisors/allies. Or the EU will throw a bone so we’ll all get out of this.