The administration of US President Donald Trump appears to have a clear foreign trade policy that uses tariffs to force its trade partners to the negotiation table. Amid the intense US-China trade war, it is also targeting Europe and Japan.
The United States wants to reverse the so-called unfair trade deals, and the ultimate goal is to achieve zero tariffs, zero barriers and zero subsidies.
Trump recently announced new tariffs on wine, sausages and airplanes from Europe. Soon, he will kick off the second round of trade talks with Japan.
On Wednesday, the World Trade Organization backed a US request to impose tariffs on US$7.5 billion of European goods, due to illegal subsidies granted to planemaker Airbus by the European Union.
A 25 percent tariff will be levied on European wine, whiskey, olive oil, sausage, pork and yogurt while a 10 percent tariff will be slapped on aircraft and helicopters from the region from Oct. 18.
“We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers,” US Trade Representative Robert Lighthizer said.
The EU hasn’t given up hope that it would be able to reach a deal with the US and avoid an escalation of the trade dispute, European Trade Commissioner Cecilia Malmström said.
Last month, Trump and Japanese Prime Minister Shinzo Abe signed the “first stage” of a trade agreement that would reduce or eliminate tariffs on US food and agricultural products and Japanese machines.
But the two sides have yet to reach a deal on tariffs on Japanese automobiles and auto parts. Abe said he would discuss the issue with Trump in the next few months.
Currently, Japanese automakers such as Honda, Toyota and Nissan hold a 40 percent share of the US market. The US levies a 2.5 percent tariff on Japanese cars.
Trump complains that Japan uses non-tariff barriers such as import restrictions, industry standards and subsidies to hamper American automakers’ access to Japan, where US makers only have less than 1 percent market share.
Trump is urging Japan to further open up its auto market or he will raise the tariff on Japanese cars to 25 percent.
The US trade dispute with Japan and Europe is quite different from the Sino-US trade conflict.
The former is a squabble between allies and is unlikely to hurt their close relationships.
On the other hand, US politicians and the general public seem to view China as America’s biggest rival in the coming decades.
So even if Trump fails in his reelection bid in 2020, that doesn’t mean the next US president will be more China-friendly.
This article appeared in the Hong Kong Economic Journal on Oct 4
Translation by Julie Zhu
[Chinese version 中文版]
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