• 401 days Will The ECB Continue To Hike Rates?
  • 402 days Forbes: Aramco Remains Largest Company In The Middle East
  • 403 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 803 days Could Crypto Overtake Traditional Investment?
  • 808 days Americans Still Quitting Jobs At Record Pace
  • 810 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 813 days Is The Dollar Too Strong?
  • 813 days Big Tech Disappoints Investors on Earnings Calls
  • 814 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 816 days China Is Quietly Trying To Distance Itself From Russia
  • 816 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 820 days Crypto Investors Won Big In 2021
  • 820 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 821 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 823 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 824 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 827 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 828 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 828 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 830 days Are NFTs About To Take Over Gaming?
Oligarch “Traitors” Appear to Flee Russia for Dubai

Oligarch “Traitors” Appear to Flee Russia for Dubai

Hours after Putin’s speech, several…

Russia Considers Nationalizing Foreign Businesses

Russia Considers Nationalizing Foreign Businesses

The Russian government is reportedly…

  1. Home
  2. News
  3. Breaking News

EU-U.S. Trade Relations Are Deteriorating

EU US Trade

While small beer compared to the U.S.’s trade war with China, the growing dispute between Washington and Brussels over subsidies by aircraft makers is likely to develop into an escalating series of tit-for-tat measures this year.

That’s particularly true if President Donald Trump feels he needs some headline-grabbing opportunities ahead of the presidential elections Nov. 3.

American jobs are often seen a surefire winner in an election year — there is little to be lost from looking like a tough negotiator and following through on threats.

On June 24, the U.S. Trade Representative’s office published a list of European products that could be subject to new tariffs as early as August, the research analysts Stratfor wrote recently.

The $4.3 billion worth of products in this round of threats are said to include olives, chocolate and gin from countries such as France, Germany, Spain, and the United Kingdom — so, hardly strategic products.

But the move marks the latest escalation of a 16-year dispute between Washington and Brussels over government subsidies to the U.S.-based aircraft maker Boeing and its chief European rival, Airbus.

The rights and wrongs of the claims and counterclaims aside, the dispute holds the risk of escalating into something more serious. The current administration has threatened on previous occasions to levy a 25% import duty on European cars in retaliation for, among other things, a perceived disparity between E.U. and U.S. import taxes. Related: How Are Low Car Sales Impacting The Metals Market?

The U.S. imposes a 2.5% tariff on cars assembled in Europe and a 25% tariff on European-built vans and pickup trucks. Europe, on the other hand, imposes a 10% tariff on U.S.-built cars and trucks.

In reality, this is more equitable than it sounds: demand for cars and sedans in the U.S. is not the same as it is in Europe. The lucrative sector of the U.S. market is vans and trucks, which the Europeans are locked out of by the high tariff which has been in place since the 1960s.

Nevertheless, the automotive trade balance is one the U.S. administration has frequently threatened to take action on in previous spats and could revisit in this one, safe in the knowledge the U.S. exports few vehicles to Europe but the Europeans export quite a lot of high-end luxury cars to the U.S.

In counter to the U.S. proposals on the airplane maker-related tariffs, the E.U. is set to move forward with tariffs on $11.2 billion of U.S. imports, likely sometime in the early fall and chiefly in retaliation for the tit-for-tat over aircraft subsidies. Adding fuel to the fire are European plans to impose digital services taxes on tech companies like Amazon and Google, who pay minimal tax in Europe but generate vast sales. The U.S. feels this unfairly penalizes U.S. firms, refusing to see the issue is not that the companies are based in the U.S. but rather that they are based outside of Europe and, therefore, exempt from the same taxes as European competitors.

The total amount of goods involved this year is unlikely to top $100 billion, just 25% of the $400 billion caught up in U.S.-China trade disputes.

But that doesn’t mean it is not of concern.

If products and services relevant to your market segment get caught up in the dispute, then the sudden imposition of tariffs, quotas, or duties could disrupt business.

Next on the horizon is a possible Trump reaction to a European travel ban on American citizens. According to Bloomberg this week, E.U. governments are poised to extend a travel ban for U.S. residents for at least two weeks, while at the same time opening up travel for Chinese citizens, as infection rates rise in the former and fall in the latter — that won’t go down well in the White House.

By AG Metal Miner 

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment