Prep for more volatility.
The trade war with China may be cooling.
But one is intensifying with the European Union (EU), where President Trump could add tariffs on $4 billion of EU goods, covering 89 products including meat, cheese, pasta, fruits, coffee, and whiskey. All as the U.S. remains locked in a dispute with the EU over two of the world’s biggest airplane manufacturers – Boeing and Airbus.
The additions to the list are "in order to enforce U.S. rights in the World Trade Organization (WTO) dispute against the European Union (EU) and certain EU member States regarding EU subsidies on large civil aircraft," according to the Office of the U.S. Trade Representative.
President Trump has also threatened to tack on tariffs of up to 25% on cars coming into the U.S., a move that could easily hit European auto hotspots like Germany and France. All come just months after Trump imposed a 25% tariff on European steel and aluminum imports.
However, U.S. Companies are Opposed
The Distilled Spirits Council of the U.S. criticized the tariff threats and warned they would jeopardize US jobs and hurt consumers.
“We strongly oppose the inclusion of distilled products in the proposed retaliation list" they said. “US companies – from farmers to suppliers to retailers – are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain US distilled spirits ... and these additional tariffs will only inflict further harm.”
Even executives at Airbus have said “this only adds to the trade tensions but in reality, does not change anything.” The level of retaliation is set by the WTO, the European plane maker said, as quoted by The Wall Street Journal, adding the U.S. move made negotiating a solution harder and could result in a “lose-lose situation” for industries on both sides.
The Good News
While tariff news is wreaking havoc on global markets, some tensions have cooled.
Remember, after threatening to imposed tariffs of another $300 billion worth of Chinese imports, President Trump decided not to move forward with it. And, for the time being, Trump will not reduce the current 25% tariffs on $250 billion worth of Chinese goods.
“We had a very good meeting with President Xi of China, excellent, I would say excellent, as good as it was going to be,” said Trump. “We discussed a lot of things and we’re right back on track and we’ll see what happens.” President Trump also agreed to restart trade negotiations, which collapsed in May 2019. He will also now allow Chinese tech giant, Huawei buy products from U.S. companies again, as long as it does not pose a threat to national security.