France announced the beginning of the EU’s trade war with the United States and called for a return to dialogue in order to avoid further escalation of the economic conflict.
The day before, US President Donald Trump accused the EU and China of manipulating their currencies. However, in France, it is believed that Trump is trying to destabilize Europe through manipulation in the trade sphere.
The IMF warns that a crisis of confidence between participants in world trade can have a more negative impact on the world economy than direct introduction of duties.
The Trump theory.
A characteristic feature of world trade is the protective duties that are applied in the case of subsidized exports or dumping. For the US, this practice is very common, unlike other Western countries. This causes dissatisfaction with the US trade partners.
However, in June, at the G7 summit in Quebec, US President Donald Trump asked the members of the group to eliminate obstacles to trade with each other.
“No tariffs, no barriers – that’s how it should be!”, he said.
The Trump theory is that free trade will reduce prices for consumers. At the same time, customs tariffs are lower in the USA than in other industrialized countries. A complete elimination of tariffs will cost the US less than other countries.
The authorities of Canada said that they can not be pressured against, and then the European Union also fell upon them.
“Sorry, but we will no longer allow our friends or enemies to get advantage in front of us in trade,” he wrote on Twitter.
This year, Trump introduced protective duties on the import of steel and aluminum in the amount of 25 percent and 10 percent for supplies to the US from the countries of the European Union, China, Canada, Mexico, Russia, Turkey and other countries, including Ukraine.
The American president explained his decision by sharply lowering the share of domestic metal production, which is perceived as a threat to US national security.
The media also reported that Trump intends to introduce import duties on the cars of German premium manufacturers to press them off the American market.
Thus, Trump kept the word given to the inhabitants of the so-called Rusty Belt on the eve of the election: in the past, the most important steel industry in the Midwest and the northeastern coast of the United States has been in economic decline for nearly half a century due to import growth, the fall and the cessation of local metal production.
In the fight against foreign competition, the US president chose a protectionist option that fully corresponds to his strategy “America first.”
From the perspective of Trump, the additional burden on the export of metal will make it less profitable, which in the future will lead to the creation of new jobs inside the country and the improvement of the American economy.
The first American victim of Trump was the legendary manufacturer of motorcycles Harley-Davidson. About this in detail in the material Korrespondent.net Beginning of the end. Trump quarreled with Harley-Davidson.
How the world responds to the US.
On July 22, French Minister of Economy and Finance Bruno Le Meir announced the beginning of a trade war with the United States and called on the parties to return to dialogue in order to avoid further escalation of the economic conflict.
“I ask the United States to get wise and again begin to respect both global rules and its allies,” Le Mair said at a meeting of the G20 ministers of economy and finance and central bankers in Buenos Aires.
On the eve of the European Commissioner for Trade Cecilia Malmström said that the European Commission expects that the conflict between the European Union and the United States on tariffs can be resolved within three years.
“We follow the WTO rules, some of our measures can take effect only in three years, by this time, we hope this conflict will go away,” Malmström said.
EC President Jean-Claude Juncker, in turn, promised that the EU would respond symmetrically to US trade restrictions.
“We will continue to respond” an eye for an eye “to those provocations that can be launched against us,” said the European politician.
The European Union has already raised tariffs for a number of American goods in response. Since June 22, earned 25 percent duty on a number of popular American goods.
This includes, in particular, orange juice, motorcycles, whiskeys, tobacco products, including cigarettes, cigars and leaf tobacco, women’s decorative cosmetics, clothing, footwear, steel products, medical steel appliances, aluminum products.
These measures are estimated at 2.8 billion euros per year. The exchange of duties is called a trade war. In detail in the material Merchant Warrior Trump. The world responds to US duties.
US’s repressive trade policy literally pushes the EU and China into each other’s arms – despite the Europeans’ fear of the “Chinese predator.” A number of experts believe that, in the future, the EU’s trade conflict with the United States can create prerequisites for attracting additional Chinese investment in Europe.
For its part, Beijing is also ready to open wider the doors to Europeans, as it is interested in the implementation of the New Silk Road project, which involves the development of China’s trade and transport links with Europe.
The Old Light for Chinese businessmen has long become not only a sales market, but also an open space for investment. In February, the owner of the Geely holding, Lee Shufu, bought 9.69 percent of the shares of the German Daimler, which produces cars Mercedes-Benz.
The deal cost him $ 9 billion and allowed him to become the company’s largest shareholder. Geely also owns 100 percent in Swedish Volvo and 51 percent in the British manufacturer of sports cars Lotus.
Chinese Dongfeng since 2014 owns 14 percent of the French Groupe PSA (Peugeot, Citroen, Opel).
The agency Bloomberg conducted a study and compiled a whole map of Chinese investment in Europe over the past 70 billion. Behind it goes Germany – 225 transactions for 20 billion. The rest lag behind, but not so much: France has 89 deals at 13.5 billion; Italy has 85 by 13 billion; the Netherlands – 82 by 11.5 billion. These five countries with the largest economies of the continent account for half of all investments.
Also, the Chinese own shares in ports, airports, large commercial and business centers and other infrastructure facilities throughout Europe (including a controlling stake at Frankfurt Airport). Most of all – 14 objects – in London.