EU Prepares for Trade War with US – Süddeutsche Zeitung

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EU countries are considering three main variants of answering possible changes in the US trade policy.

EU Prepares for Trade War with US - Süddeutsche Zeitung

Photo: RIA Novosti / Aleksey Vitvitskiy

Active discussions on how to react to plans of US President Donald Trump to introduce a 20 percent duty on imported goods in the US are held in EU countries, the German Süddeutsche Zeitung newspaper reported.

The Europeans consider three variants for answering possible changes in the US trade policy, Cerstin Gammelin, an author of the article, noted.

First of all, EU states themselves could subsidize their enterprises in order to save the companies from additional costs for new duties. In addition, companies would manage to remain competitive. However, this variant would hit the budget of European countries.

Secondly, the Europeans can make a complaint against the US to the World Trade Organization (WTO). But in this case, they should remember about the fact that the process of resolving a dispute within the framework of this organization can take several years, and, at the same time, the outcome remains unclear, Gammelin reminded.

Finally, the EU can strike back in kind by increasing duties on goods from the US, but this is difficult to do. This would require an approval by the WTO and consent of all EU members. EU states cannot introduce additional duties unilaterally, as issues of the trade policy are decided by supranational bodies of the block, the author noted.

In this situation, it is more profitable for the Europeans to discuss problems in the trade relations with Trump in advance. Before a meeting with Trump in Washington, German Chancellor Angela Merkel prefers to avoid stern wording and hopes to find a compromise. Washington, in contrast, does not skimp on harsh statements. Trump’s trade advisor Peter Navarro described the balance of visible trade with Germany as a “serious problem.”

According to Gammelin, Trump in his usual manner hopes to make deals with European countries separately, leaving out the EU authorities. However, Merkel strongly opposes such an approach, insisting that the trade policy’s issues are under the jurisdiction of the supranational bodies. But, according to the author of the article, it is unlikely that Merkel will be able to change the US president’s mind.

Earlier, Trump repeatedly said about his intention to introduce protective duties on the import of certain goods in the US, including the import of cars of German manufacturers. In this way, the US President plans to stimulate production growth in the US itself and create new jobs.

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