The European Commission will today unveil a list of $20 billion worth of US products that could be targeted by tariffs, a response to a similar target list published by the US Trade Representative last week.
The tit-for-tat threats mark an escalation in transatlantic trade tensions. While this particular dispute stems from a row over aircraft subsidies, it’s also part of broader protectionist tug-of-war.
Washington imposed tariffs on steel and aluminium imports last June, hitting European manufacturers. The EU struck back with tariffs on $3 billion of American imports. The Trump administration is currently considering whether to impose tariffs on Europe’s auto industry—an alarming prospect, particularly for German automakers.
The spectre of a deeper EU-US trade war is concerning. The two economies account for a third of the global economy and almost a third of world trade. An intensified transatlantic trade row would add to global economic headwinds, which already include US-China trade tensions and Brexit.
However, this appears unlikely to materialise. On Monday, Europe’s trade chief suggested Brussels was ready to begin negotiations on a deal to wind back some tariffs before October 31.
To be sure, hurdles remain. For one, Washington insists that market access for US agricultural products be part of trade talks, something Ms Malmstrom says is “a red line for Europe”. But for a US president nearing a re-election campaign, a trade deal will prove an attractive prospect.
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Simon is the founder of Foreign Brief who served as managing director from 2015 to 2021. A lawyer by training, Simon has worked as an analyst and adviser in the private sector and government. Simon’s desire to help clients understand global developments in a contextualised way underpinned the establishment of Foreign Brief. This aspiration remains the organisation’s driving principle.