January 31, 2020

America and Europe will lose to China in transatlantic trade war

By Carisa Nietsche and Sam Dorshimer

A transatlantic trade war is looming. After finally concluding a phase one trade agreement with China, President Trump is now turning his sights to Europe and is doubling down on his threat to levy more tariffs. While there was positive talk from both the United States and the European Union at the World Economic Forum, there are major obstacles to any agreement given the trade threats by Trump and all his demands for striking a deal. These threats aim to decrease the trade deficit with Europe, shape policy on Iran, and negotiate a better deal. Trump has claimed that great power competition with China is his top priority. However, effectively competing against China will require help from European allies. If the United States escalates a trade war with Europe, only China will come out as a winner.

The current trade policy with Europe has been turbulent from the start. Since 2018, tariffs have been imposed on European steel and aluminum. Last spring, Trump also called for tariffs on European autos, a threat he has renewed to pressure European allies to initiate a dispute mechanism in the Iran nuclear deal. When France imposed a technology services tax, the administration threatened tariffs on over $2 billion worth of French exports. Trump even asserted that Europe is worse than China on trade issues. Uncertainty about his tariff threats only increases the chances of an intensified ongoing trade war between the United States and Europe.

Read the full article in The Hill.

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