All you need to know about EU-US trade war

Taxes imposed by the EU apply on a list of goods manufactured in the United States, such as agricultural products (rice, corn, tobacco), steel, as well as vehicles (motorcycles, boat) or textile.


Devdiscourse News Desk | Updated: 23-06-2018 15:57 IST | Created: 23-06-2018 15:56 IST
All you need to know about EU-US trade war
The rebalancing on the remaining 3.6 billion euros will take place either in three years or after a possible victory for Europeans in their WTO appeal. (Image Credit: Twitter)
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The trade war is declared between the United States and the European Union, after the entry into force of additional customs duties in Europe on dozens of American products, such as jeans, bourbon or motorbikes.

These new taxes, officially imposed since Friday 0H00 Brussels time (Thursday 22H00 GMT), are the response of Europeans to the 25 percent taxes on steel and 10 percent on aluminum imposed by the United States to most countries of the world, including some of its allies.

"The unilateral and unjustified decision of the United States" to impose these duties "leaves us no choice," insisted this week the European Commissioner for Trade Cecilia Malmström.

"The rules of international trade cannot be violated without our reaction," said Malmström, adding that "if the United States removed their tariffs," European measures would be "also removed".

Before the EU, Mexico, also concerned, had already set up retaliatory measures against Washington in early June, while Canada plans to do so in early July.

Europeans are also caught in the crossfire between China and the United States, also engaged in an escalation of protectionist measures and threats of retaliation.

"Mr. Trump has opened two (commercial) fronts and both could escalate out of control," expert economist intelligence unit John Ferguson told AFP.

Germany, a major exporter, is already seeing its growth forecasts dwindle, because of the global business climate, even though its exports are only marginally affected so far by US measures.

It would be quite different if Donald Trump put into effect another threat, that of directly taxing cars imported into the United States - which would be particularly damaging to Japanese and German manufacturers.

Taxes imposed by the EU apply on a list of goods manufactured in the United States, such as agricultural products (rice, corn, tobacco), steel, as well as vehicles (motorcycles, boat) or textile.

"If we chose products like Harley-Davidson, peanut butter, bourbon, it's because there are alternatives in the (European) market, we do not want to do anything that could harm consumers," EU Vice President Jyrki Katainen said Thursday.

"Moreover, these products will have a strong political symbolic significance," he argued.

Europeans have long hoped to escape the punitive taxes announced in March by Donald Trump. But after two temporary exemptions and attempts at trade talks with Washington, the EU finally saw these taxes apply on June 1st.

In the process, Europeans filed a complaint with the World Trade Organization (WTO). They also plan to introduce so-called "safeguard" measures to protect their market from foreign steel and aluminum that would no longer find markets in the United States.

The retaliatory measures applied since Friday on the American products correspond, in value, with the damages caused by the American decision on the European exports of steel and aluminum towards the United States, for a total of 6.4 billion euros in 2017.

The EU will initially exercise its rights on US assets to the tune of 2.8 billion euros.

The rebalancing of the remaining 3,600 million euros will take place in three years or after a possible victory of the Europeans in their appeal to the WTO.

Transatlantic relations have floundered since Donald Trump's election because of disagreements over many issues, such as the Paris climate deal, the US embassy's move to Jerusalem, and Iran's nuclear deal.

And they particularly strained after a recent tumultuous G7 summit, with the US president sharply rejecting the painfully negotiated joint declaration, which condemned "protectionism."

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