Optimism greets US-EU trade talks despite ambiguity

The US and European Union (EU) have agreed to suspend new tariffs and work towards lowering existing trade barriers following talks between US President Donald Trump and EU Commission President Jean-Claude Juncker.

Juncker visited Washington on Wednesday amid a backdrop of protectionist rhetoric and political attacks on the EU by President Trump, who recently branded the bloc a “foe” of the US.

However, speaking in the White House Rose Garden last night, both men struck an optimistic tone, with Juncker describing a “good, constructive meeting.”

Both sides agreed to refrain from implementing new tariffs while they seek to create more favourable transatlantic trade conditions, including “zero tariffs,” they said.

In what Bloomberg described as ‘the biggest sign yet that a major trading partner can convince the US to back away from a trade war,’ Juncker also said they would re-examine US steel and aluminum tariffs and the retaliatory duties imposed by the EU.

According to the BBC, President Trump said the EU would increase purchases of US liquified natural gas (LNG) and soy beans, making it a “massive buyer.”

“The EU is going to start to buy a lot more soy beans – they are a tremendous market – buy a lot of soy beans from our farmers, primarily in the Midwest,” he said.

However, there are some clear deficiencies with the apparent deal, the starkest being that the EU as an entity does not buy any US soy beans or gas. Former US Ambassador to the EU, Anthony Gardener, tweeted that the agreement was “absurd” because of that very point.

“Who exactly is going to be buying the soybeans and the LNG? Shipped LNG not competitive with piped gas. And commercial parties not the EU buy soybeans and gas,” he said.

In this respect there is a suspicion that President Trump is talking up the agreement to buoy the spirits of US farmers caught in the jaws of his trade policies; the White House announced a US$12 billion bail-out package to support them earlier this week.

And, of course, the President has proven form for sudden changes of direction, as seen when he abandoned a negotiation framework with China just days after it was announced.

However, the ambiguity around the deal hasn’t deterred markets from responding positively to the meeting, with Reuters reporting a jump in European stock markets and a buoying of car manufacture shares.