U.S. and E.U. Trade War

After the US-China trade relations came to a logical conclusion, preceded by lengthy negotiations and an open trade standoff, the market received more questions than answers. The basic duties remain in force, despite statements about their speedy cancellation. The implementation of the few agreements that were concluded during the negotiations need to be constantly monitored. At the same time, a number of agreements were not fulfilled on both sides.

The Trump administration has switched to the US-European Union (EU) trade relations. So, in early April, the White House announced the revision of trade relations between the US and the EU and the introduction of trade duties in the amount of $ 11 billion. Such a statement was based on Airbus subsidies, which were declared illegal by the World Trade Organization (WTO). The US subsidies include not only Airbus products from Europe, but also products of the agro-industrial complex and food products.

The aggravation of U.S.-E.U. trade relations

Earlier, in March 2018, the first step on the path of the US trade war against the EU was the duty 25% on steel and 10% on aluminum, which also extended to Canada and Mexico. As a result, a new trade agreement has emerged between the United States, Canada and Mexico. And the EU imposed duties on American goods in the amount of 2.8 billion euros. Further introduction of duties by the EU was halted by the promise of the United States to introduce 20% of duties on cars from the EU, which will result in losses for the European Union of $ 300 billion.

Drivers to the aggravation of trade relations

One of the obvious reasons for the aggravation of trade relations between the US and the EU were Boeing and Airbus, which actually represent the US and the EU aviation industry. Due to tragic circumstances, the authority of Boeing came under considerable pressure. It caused a reduction in orders for the supply of aircraft of this company. At the same time, China ordered 300 aircraft from Airbus worth 30 billion euros.

Trade volumes between the USA, China and the EU

At the end of 2017, the volume of trade between the United States, China and the EU amounted to the following :

• Exports of goods from the US to China $ 170 billion, the US imports from China $ 480 billion.
• Exports of goods from the EU to the US $ 370 billion, the EU imports from the US $ 250 billion.
• Exports of goods from the EU to China $ 200 billion, th eEU imports from China $ 370 billion.

It turns out that the US trade war against the EU was a matter of time and ranked second in line for Trump’s intentions to reduce the US trade deficit.

At the same time, the main risk factor for the European Union and the main lever of pressure for the White House are duties on cars from Europe. In fact, it will put a significant pressure on the euro.

Anton Hanzenko