 |
| "The reincarnation of US Voodoo Economics" |
First a look at the "big picture" of trade between the EU and the US,
which Mr. Trump is now ready to undermine with his recent nonsensical
"tariffs" statement.
- Total US investment in the EU is three times higher than in all of Asia.
- EU investment in the US is around eight times the amount of EU investment in India and China together.
- EU and US investments are the real driver of the
transatlantic relationship, contributing to growth and jobs on both
sides of the Atlantic. It is estimated that a third of the trade across
the Atlantic actually consists of intra-company transfers.
- The transatlantic relationship also defines the shape
of the global economy as a whole. Either the EU or the US is the
largest trade and investment partner for almost all other countries in
the global economy.
- The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.
The EU response to the Trump Tarrifs announcement was swift and surgical .
The European Union’s top trade official mentioned cranberries, orange
juice and peanut butter as possible targets Wednesday as the E.U.
prepares to strike back if President Trump follows through with tariffs
on imports of steel and aluminum.
European officials are also preparing to target $3.5 billion in American
goods through a 25 percent "tit-for-tat" levy across consumer,
agricultural and steel imports, Bloomberg reported, citing a list compiled by the European Commission.
This came after EC President Jean-Claude Junker on Friday mentioned targeted products like Harley-Davidson (
HOG) motorcycles, Levi's jeans and bourbon if the U.S. tariffs are implemented. Canada President Justin Trudeau called Mr. Trump
Monday evening to register his "serious concer".
"Retaliation against US by trading partners is likely," Goldman Sachs (GS)
economists wrote in a note. "In the past, retaliatory tariffs have
focused on the product in dispute (in this case steel and/or aluminum),
consumer goods with a particular focus on luxury items and agriculture.
We expect a similar pattern this time."
While retaliation is likely to come in tariff form, "more subtle changes to tax and regulatory policies
targeting U.S. companies could also follow," the economists wrote.
Ford (F) and GM (GM)
could feel a pinch of about $1 billion each, or 12 percent and 7
percent of each company's respective operating income for 2017, if the
25 percent steel tariff is implemented and prices rise at a similar
rate, Goldman Sachs analysts estimated in a recentseparate report.
U.S.-based machinery companies would get squeezed as costs increase. Well-known brands with good distribution, like Deere (DE) and Caterpillar (CAT) might do better than Terex (TEX) and Oshkosh (OSK), Goldman said. Oshkosh is based in House Speaker Paul Ryan's home state of Wisconsin.
E.U. Trade Commissioner Cecilia
Malmstrom also took aim at Trump’s assertion that U.S. national
security justified plans to impose tariffs of 25 percent on steel and
10 percent on aluminum.
The U.S. measures “would mainly impact traditional allies of the United States,” she said.
E.U.
officials had previously flagged Kentucky bourbon, Harley-Davidson
motorcycles and Levi’s jeans among the products they have in their
sights for retaliatory tariffs. A
draft of European countermeasures
published by Bloomberg News targets $3.5 billion in annual imports from
the United States, including $1.1 billion in U.S. steel products, along
with clothing, makeup, motorcycles, boats, corn, rice, beans and other
agricultural products.
E.U. countries exported $6.2 billion worth
of steel to the United States in 2016, according to E.U. figures. The
E.U. is the top trading partner of the United States in goods, and it is
the top U.S. export market.The European Union’s top trade official mentioned cranberries, orange
juice and peanut butter as possible targets Wednesday as the E.U.
prepares to strike back if President Trump follows through with tariffs
on imports of steel and aluminum.
Note EU-Digest 2017 : See list below of U.S. trade in goods with European Union
Please note that: All figures are in millions of U.S. dollars on a
nominal basis, not seasonally adjusted unless otherwise specified.
Details may not equal totals due to rounding. Table reflects only those months for which there was trade.
| Month |
Exports |
Imports |
Balance |
| January 2017 |
21,290.3 |
32,828.8 |
-11,538.5 |
| February 2017 |
22,994.8 |
32,386.5 |
-9,391.7 |
| March 2017 |
25,691.5 |
36,881.1 |
-11,189.6 |
| April 2017 |
22,960.2 |
35,498.7 |
-12,538.5 |
| May 2017 |
23,732.0 |
36,488.1 |
-12,756.1 |
| June 2017 |
23,768.1 |
36,237.8 |
-12,469.7 |
| July 2017 |
21,438.3 |
34,892.7 |
-13,454.5 |
| August 2017 |
23,383.6 |
35,772.4 |
-12,388.8 |
| September 2017 |
24,277.9 |
35,702.6 |
-11,424.7 |
| October 2017 |
25,689.3 |
39,411.6 |
-13,722.3 |
| November 2017 |
23,528.5 |
38,256.8 |
-14,728.3 |
| December 2017 |
24,762.9 |
40,575.7 |
-15,812.8 |
| TOTAL 2017 |
283,517.4 |
434,933.1 |
-151,415.6 |
Given the low average tariffs (under 3%), the key to unlocking this
potential lies in the tackling of non-tariff barriers. These consist
mainly of customs procedures and behind the border regulatory
restrictions
.
The non-tariff barriers come from diverging regulatory
systems (standards definitions notably), but also other non-tariff
measures, such as those related to certain aspects of security or
consumer protection.
The tariffs statement by President Trump, if he persists to follow
through on his threat, could eventually also turn into a total trade
war between the EU and US, and mean the end of the Atlantic Alliance,
which has brought stability, peace and prosperity to Europe and the US,
since the end of the second world war.
It must not be allowed to happen.
EU-Digest The above article can be republished only if EU-Digest is referred to as its source
