US and EU in trade war stalemate following fruitless G20 summit

The US and its European allies are in a trade stalemate after Finance Ministers at last weekend’s G20 summit in Argentina failed to produce any agreement, the Singapore Times reports.

French Finance Minister Bruno Le Maire was quoted by the BBC as saying that the trade war is now a reality and the EU could not negotiate an FTA with the US unless Washington first removed tariffs on steel and aluminium.

US Treasury Secretary Mnuchin backed comments President Trump had made throughout the previous week during his tour of Europe and the UK, where he described China, Russia and the EU as trade ‘foes’. He also reiterated President Trump’s threat that the US could hit China with more punitive tariffs on US$500 billion on goods. The US has also threatened tariffs on foreign car imports, including those from the EU, which is a big concern for Germany.

Le Maire said, however, that “we refuse to negotiate with a gun to the head”. Both Le Maire and German Finance Minister Heiko Maas have said that this trade war will produce only losers and both sides must commit to de-escalation and respect the rules of multilateralism.

If the US goes ahead with implementing threatened tariffs on the EU car sector, the EU will likely implement retaliatory tariffs. These are not yet decided but, as reported in the Financial Times, the EU is considering hitting €10 billion of US products with 20 per cent tariffs, or €18 billion of goods on which lower levels of extra duties would be applied. Products being considered for the list include suitcases, construction vehicles and photocopiers.

Jean-Claude Junker, European Commission President, will meet President Trump in Washington this Wednesday, in an effort to reduce trade tensions.