Thursday, March 08, 2018 10:40 am
Trump's trade war could trigger EU tariffs on cranberries and peanut butter
Michael Birnbaum and Quentin Ariès | Washington Post
BRUSSELS – The European Union's top trade official mentioned cranberries, orange juice and peanut butter as possible targets Wednesday as the EU prepares to strike back if President Donald Trump follows through with tariffs on imports of steel and aluminum.
EU 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.
EU 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.
EU countries exported $6.2 billion worth of steel to the United States in 2016, according to EU figures. The EU is the top trading partner of the United States in goods, and it is the top U.S. export market.
The hardening stance from the 28-nation bloc underscores the global backlash to Trump's "America First" trade posture and adds to worries that it could ripple through the world economy by triggering reactions from major U.S. trading partners.
"A trade war has no winners," Malmstrom told a news conference in Brussels, a clear counterpoint to Trump's remarks last week that a trade war would be "easy" for the United States to win.
She added that the EU views the U.S. tariffs as an economic tool, not as national security measures, and that the step violates international trade rules. EU leaders would lodge a complaint with the World Trade Organization if Trump imposes the tariffs, she said.
"We cannot see how the European Union, friends and allies in NATO, can be a threat to international security in the U.S.," she said. "We find that assumption to be deeply unjust."
Trump's plans have set off a furious lobbying campaign in Washington, as well as deep dissent inside the White House and Congress. White House economic adviser Gary Cohn, a staunch opponent of the tariffs, announced his resignation Tuesday, and Defense Secretary Jim Mattis and Secretary of State Rex Tillerson have stood against the plans.
In Brussels, Malmstrom said that if Trump imposes the tariffs, he will be met with "a firm but proportional response." The tariffs could cost Europe thousands of jobs, she said.
Trump singled out the EU on Tuesday after meeting with Swedish Prime Minister Stefan Lofven in Washington.
"The European Union has been particularly tough on the United States," Trump said. "It's been a very, very unfair trade situation."
He has zeroed in on cars as one area of unfair competition, complaining that EU tariffs for U.S.-made cars are 10 percent, whereas the United States imposes tariffs of 2.5 percent on cars imported from Europe. European officials say that targeting their carmakers ignores the plants that Mercedes, BMW and others have set up in the United States.
And they say that although the United States may have had an overall trade deficit of $92 billion with them in 2016, Trump's focus on manufacturing ignores the vibrant and growing services portion of trade, where the United States has a trade surplus.
Many trade experts also say that deficits are not an especially valuable way for the United States to assess whether a trade relationship is fair.
This would not be the first time the two sides have taken aim at each other.
Hosuk Lee-Makiyama, director of the European Center for International Political Economy, a Brussels-based think tank, said that the EU's swift declaration that it would increase tariffs on American-made goods was also related to the fact that "they feel exposed to something they have done themselves."
In recent years, the EU adopted measures to protect its steel industry, and the history of trade between the EU and United States periodically has featured these sorts of squabbles. In 2002, the administration of President George W. Bush proposed similar tariffs but subsequently withdrew them after the World Trade Organization deemed them illegal.
But Europe responded at the time with a similar target list of American goods produced in sensitive states - including Florida, where the president's brother Jeb Bush was governor.
These types of subtle threats are par for the course in trade tensions, and the EU has also found itself on the receiving end.
"You keep those dossiers in the top draw for a rainy day," Lee-Makiyama said. He recalled that when the EU increased tariffs against Chinese solar panels, Beijing increased tariffs on key European products, including a wine produced by a vineyard controlled by the wife of a former top European trade official.
"We know where the bodies are buried," Lee-Makiyama said.
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The Washington Post's James McAuley in Paris contributed to this report.