Donald Trump Escalates Trade War Signaling On Twitter; Iconic Apparel Brands, Car Makers In The Crosshairs

48 hours after U.S. President announced his decision to impose tariffs on steel and aluminum products exported to the U.S., the country’s top trading partners are hitting back hard. The European Union Commission president, Jean-Claude Juncker, said the EU was prepared to respond forcefully by targeting U.S. imports such as Harley-Davidson motorbikes, Levi’s jeans and Kentucky bourbon whiskey. EU trade chief are reportedly considering slapping 25% tariffs on around $3.5bn of imports from the U.S. after Trump’s surprise announcement.

Trump’s response came fast and heavy after Juncker’s statement. Trump fired back in a tweet on Saturday. "If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.," he wrote. "They make it impossible for our cars (and more) to sell there."

The U.S. imported more than 1.2 million European cars from brands like BMW and Volkswagen in 2016, the most recent year for which data is available, according to the European Automobile Manufacturers Association. The U.S. is the world’s second largest car market with an estimated 829 motor vehicles per 1,000 inhabitants in 2015.

Trump has previously attacked car manufacturers in Europe, especially in Germany, with which the U.S. has a huge trade deficit. Last year, Trump criticized companies such as BMW, Daimler and Volkswagen for failing to produce more cars on U.S. soil and threatened a border tax of 35% on vehicles imported to the U.S. market from Mexico.

Trump has been on fire with multiple tweets a day since his announcement to introduce 25% duties on steel products and 10% on aluminum products imported into the U.S. In another tweet, the president railed against “very stupid” trade deals by earlier administrations and said other countries “laugh at what fools our leaders have been. No more!”

The U.S. President seems to be on course to start the tariff war and said as much in another one of his tweets.

However, Trump’s criticism of exports into the U.S. show only part of the picture and are aimed at playing to the gallery of voters who powered him in to office on the promise of bringing manufacturing jobs back to the U.S.

The EU as a single market, ranked 1st as an export market for the United States in 2016. U.S. goods and services trade with the EU totaled nearly $1.1 trillion in 2016.  Exports totaled $501 billion; Imports totaled $592 billion.  The U.S. goods and services trade deficit with the EU was $92 billion in 2016. Even though the U.S. has a trade deficit with the EU, it has a trade surplus when it comes to service.

Trade in services with the EU (exports and imports) totaled an estimated $407 billion in 2016.  Services exports were $231 billion; Services imports were $176 billion.  The U.S. services trade surplus with the EU was $55 billion in 2016.

The above numbers are taken from United States Trade Representative department’s website. The EU’s strong response to Trump’s decision is also a result of the double whammy that U.S. steel tariffs would expose the countries to. First, it impacts the competitiveness of the European countries exporting steel to the U.S., followed by an additional pressure of the destabilising effects on the European market caused by the flooding of steel from countries that would have otherwise exported to the U.S.

As the numbers show, the U.S. has not been a victim of international trade. In fact, Trump’s action seem to discount the fact that good trade relations with the EU support an estimate2.6 million in jobs in the U.S.(2015), according to the USTR website. Of these, 1.2 million jobs are supported by goods exports and 1.4 million supported by services exported.

Those criticizing Trump’s actions point out the possibility of blow back impacting a range of areas in the U.S. Senator John McCain, from Trump’s own party tweeted, “Sweeping tariffs will only serve to hurt American workers and alienate us from our most important allied and trading partners.”

(The above story first appeared on LatestLY on Mar 04, 2018 09:45 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).