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3/12/18

EU Reaction to US Trump Administration Tariffs: Counter-Tariffs Proposal Is Raising Prospects Of Trade War - by Zoltan Ban

In response to America's steel & aluminum tariff plan, the European Commission has drawn up a list of American products to impose tariffs on, ranging from orange juice to motorcycles.

The proposal needs the approval of EU member states, but if it does go ahead, it will likely lead to US retaliatory measures, which would then spark a trade war.

The onset of a major trade war can result in significant negative side effects, ranging from inflation & higher interest rates, to multinationals taking losses on capital investments abroad.

It did not take long after President Trump proposed tariffs on imports of steel & aluminum of 25% & 10% respectively, for one of America's main trade partners to announce counter-measures meant to hurt American products in kind. As is the case with many things in the EU it now has to seek the approval of each individual country, which means that it is by no means a done deal. 

If it does get approval from all EU states however, it will mean that a number of US products, ranging from metals & other industrial goods, to orange juice may be affected. 

At this point, based on an article I read on a Romanian news site, the total value of American goods affected with a proposed 25% counter-tariff is estimated at $3.5 billion. 

This by itself is by no means a huge hit to American economic interests, but the inevitable question arises whether this might be only the beginning of a trend which will lead to more and more trade barriers between the world's two largest economies, and perhaps throughout the world.

Read more: EU Counter-Tariffs Proposal Is Raising Prospects Of Trade War | Seeking Alpha

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