Commercial War: the United States on all fronts

Politics

Washington | China, European Union, Mexico and Canada, Japan … The Trump administration launched an all-out trade war. Just the eye-to-eye fight, tooth for tooth with Beijing could cut global GDP by 0.7% by 2020, according to recent estimates by Oxford Economics.

Here is a panorama of the commercial fronts opened by the White House.

CHINA

After imposing import taxes of 25% on washing machines, solar panels, steel and aluminum, already a total of 34 billion dollars of Chinese products, Washington will tax from 23 August a series of other products, worth $ 16 billion. In the line of sight: motorcycles, tractors, parts for railways and electrical circuits in particular.

The United States has already threatened to tax $ 200 billion of additional Chinese goods (fish, tires, paper and chemicals for example), starting in September. This would bring to 250 billion dollars the total of Chinese products taxed by Washington.

And Donald Trump said he was ready to “go to the 500”, in other words to tax all imports from China (505 billion dollars in 2017, a deficit for Americans of 375 billion on the only goods) .

In addition to this abysmal deficit, Washington blames Beijing for “theft” of intellectual property rights, non-tariff barriers and technology transfers imposed with Chinese joint ventures.

For their part, the Chinese authorities accuse Washington of having triggered “the biggest commercial war of the economic history”. They announced on July 6 retaliatory measures on $ 34 billion of US imports, including pork and soy, and added 8 August 16 billion additional (including coal, medical instruments or waste).

In a perfect “tooth for tooth” strategy, Chinese taxes will also be 25% and will also be applied from August 23rd.

But this battle of tariffs could find its limits: China imports almost four times less than it exports to the United States, which limits its capacity for retaliation.

EUROPEAN UNION

Donald Trump agreed to a truce with Brussels on 25 July. Both sides said they wanted to eliminate almost all tariffs, and the US president confirmed that there would be no taxes on the European automotive sector during the negotiations.

Since 1 June, the European Union has been punished by US punitive tariffs of 25% on steel and 10% on aluminum. In retaliation, she raised customs duties on June 21 on 2.8 billion euros ($ 3.2 billion) of typically American products, including jeans, bourbon, or Harley-Davidson.

The truce allowed the EU to remove the threat of tariffs on car imports – a particular concern for Germany, a major exporter of cars in North America.

CANADA AND MEXICO

Canada, subject to tariffs on steel and aluminum, also retaliated for $ 12.6 billion, which came into effect on June 30. In addition to US steel and aluminum, whiskey, ketchup, orange juice, sailing and motor boats and lawnmowers are also targeted.

For its part, Mexico has imposed equivalent customs duties “on various products” imported from the United States, including some steel, fruit and cheese.

In addition, negotiations between Washington, Mexico City and Ottawa to modernize the North American Free Trade Agreement (NAFTA), in effect since 1994, are dragging on. But the United States and Mexico have raised a possible deal by the end of August.

IRAN

Following its withdrawal from the Iranian nuclear deal signed under Barack Obama, Washington reinstated on 6 August sanctions against Tehran and all companies with ties to the Islamic Republic.

This first round of sanctions concerns the automobile and civil aviation, as well as blockages on financial transactions and imports of raw materials. On November 4th, energy and finance will follow.

Washington is determined to reduce “zero” exports of Iranian crude.

Several countries have requested exemptions in early June to continue trading with Tehran, to no avail.

JAPAN

Japan, which has been hit by steel taxes since March, has informed the WTO that it wants to impose 50 billion yen (385 million euros) in taxes on US goods in retaliation.

For the country, however, the main concern is the threat of taxes on car imports.

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