EU-US Trade Relations: Six Ways How Trump Gets Trade and Europe Wrong - by Holger Schmieding

U.S. President Donald Trump is bringing the world close to a genuine trade war. Judging by his own rhetoric, Trump gets key trade issues wrong on at least six counts:

1. If China poses a problem, why not join forces with the EU?

In his dealings with China, Trump has half a point. China ought to change some of its practices, including its penchant for forced technology transfer and its habit of discriminating against foreign companies.

These legitimate concerns do not apply to the EU, however. Unfortunately, Trump seems to have rejected the original EU offer to jointly lean on China to mend its ways.

2. Can trade barriers reduce a U.S. deficit in a meaningful way?

Not really. The U.S. current account deficit of 2.3% of U.S. GDP in 2017 is not the result of supposedly unfair practices of trading partners.

Instead, the U.S. deficit reflects the country’s traditionally strong appetite for imports as well as the fact that the United States does not save enough to finance its investments at home. Short of actually halting imports, U.S. trade barriers will not change these factors very much.

3. Does the EU run a surplus with the U.S.?

Trump complains about too many German cars on Fifth Avenue — although half of those cars may actually be built in the United States.

Still, the United States indeed imports more goods from the EU than it sells in Europe. But that is only half the truth. The U.S. goods deficit is offset by a small surplus in services and a big surplus in income (largely from the Netherlands where some U.S. companies seem to pool their EU-wide profits).

As the chart below shows, the United States has actually run a small current account surplus with the EU since 2009. What Europe earns by selling goods to the United States, it spends on licensing fees for U.S. technology and on U.S. services. Nothing unfair here.



4. Is the EU refusing to cut tariffs on U.S. exports?

President Trump complains that EU tariffs are high. For cars, that is true. For trucks, however, it is the other way around. On average, EU tariffs are close to those of the United States.

In 2017, Trump rejected the TTIP deal that would have abolished almost all tariffs between the United States and the EU. For that, he can only blame himself.

5. Talk to Brussels, not Berlin and Wolfsburg

Trump’s ambassador to Berlin, Richard Grenell, has reportedly offered German car companies to abolish all car tariffs between the two countries on a bilateral basis.

But such a “divide and rule” attempt will not work. On trade, only the EU can and will strike deals, not Berlin. Moreover, as a result of the recent trade tensions, the EU seems more united on trade than on most other issues.

6. Can the U.S. bully the EU on trade?

The EU as such is not a strong force in global politics. But its sheer market size makes the EU the top trading power of the world.

As a result, the EU is less inclined than any other region to give in to trade threats.
Conclusion

A well-balanced deal to liberalize U.S.-EU trade is possible, but only if Trump’s advisors start to understand the EU — and then manage to convince their president.

Read more: Six Ways How Trump Gets Trade and Europe Wrong - The Globalist

International Trade: U.S. trade gap edges up; deficit with China at 11-month high

The U.S. trade deficit increased less than expected in July as both exports and imports fell, suggesting that trade could contribute to economic growth in the third quarter.

The Commerce Department said on Wednesday the trade gap rose 0.3 percent to $43.7 billion. June’s trade deficit was revised down slightly to $43.5 billion from the previously reported $43.6 billion.

Economists polled by Reuters had forecast the trade shortfall widening to $44.6 billion in July. When adjusted for inflation, the trade deficit increased to $61.6 billion from $60.8 billion in June. The so-called real goods deficit in July was below the second-quarter average of $62.4 billion.

While that suggests trade could add to gross product in the third quarter, economists at Wrightson ICAP cautioned that Hurricane Harvey could significantly impact commodity prices and trade volumes, and push up the trade deficit in September.

The politically sensitive U.S.-China trade deficit increased to an 11-month high in July. That ongoing deficit has grabbed the attention of President Donald Trump, who has blamed it for helping to decimate U.S. factory jobs as well as stunting U.S. economic growth.

Trump, who argues that the United States has been disadvantaged in its dealings with trade partners, has ordered the renegotiation of the North American Free Trade Agreement (NAFTA), which was signed in 1994 by the United States, Canada and Mexico.

On Saturday August 2,  Trump threatened to withdraw from a free trade deal with South Korea.

 Read more: U.S. trade gap edges up; deficit with China at 11-month high | Hellenic Shipping News Worldwide

EU-US Relations: Trump undercuts White House messaging in critical remarks about Germany’s trade surplus

 Days after President Donald Trump returned from his first overseas trip as the president, he warned that the U.S.-German trade relationship is “very bad” and suggested “this will change,” following a reportedly closed-door meeting last week when he criticized Germany’s trade surplus.

“We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military,” Trump tweeted on Tuesday. “Very bad for U.S. This will change”

The president’s latest tweet comes two days after German Chancellor Angela Merkel hinted that her country couldn’t “fully rely” on countries like the United States in part because of “what I experienced in the last few days.” The German chancellor reiterated Tuesday that the German-U.S. relationship is of “outstanding importance,” but suggested that Europe would “take our fate into our own hands” moving forward.

Last week, Trump and Merkel both attended meetings at a NATO summit meeting in Brussels and a Group of 7 (G7) meeting in Taormina, Italy. The most contentious issues were on climate and trade, with Trump planning to pull the United States out of the Paris climate deal. His critical remarks on Germany’s trade policy raised eyebrows with German politicians, including Thomas Oppermann, the parliamentary caucus leader of the Social Democrats.

“Donald Trump is making clear with his tweet that he considers Germany a political opponent,” Oppermann said. “This is a new situation — we lived for decades in the certainty that we could rely on each other as partners in an alliance, and this certainty no longer exists today.”

Trump’s tweet on Tuesday also raises eyebrows in the United States for another reason. It undercuts the White House’s messaging from last Friday, which sought to downplay the seriousness of his critical remarks on trade and his suggestion that the country was selling too many cars to the United States.

Note EU-Digest: Trumps ignorance of the auto industry is terrifying. Before making critical remarks about trade with Germany, is he aware that Germany manufactures cars in the US and employs large numbers of US workers? Here are the facts:

Roughly 850,000 German vehicles are made in the US as reported by Reuters and some 33,000 people are employed by German car companies in the US.

VW recently built an entire plant in Tennessee, employing 2,000 workers directly

And these are just some facts about the German companies = if we add Toyota, Hyundai, Honda  to this equation the numbers of people these companies in their totality employ are staggering.  

Read more: Trump undercuts White House messaging in critical remarks about Germany’s trade surplus

US Economy: March’s trade gap drags US economy down into the red

The US trade gap has jumped to its highest level in six years after imports surged following the end of a ports dispute on the west coast.

The trade deficit jumped by so much, 43%, that it suggests the US economy contracted in the first quarter. Several analysts have speculated Q1 will be poor because of bad weather. It was the biggest percentage rise since 1996.

Prices for U.S. Treasuries turned positive after the data, while U.S. stock index futures added to losses. The dollar was slightly weaker against a basket of currencies.

March’s percentage increase in imports was the largest on record.

It all means a turnaround form 2014’s last quarter growth, but markets are expecting better once the temporary weather and strike factors work their way out of the system.

Read more: March’s trade gap drags US economy down into the red | euronews, economy

Global Trade: US-China trade deficit hits record high - Jack Freifelde

The United States' trade deficit with Chitna reached an all-time high of more than $35 billion in September, representing 80 percent of the US' total trade gap of $43 billion, according to US Commerce Department data released Tuesday.

Economists are calling the development the result of macroeconomic shifts in the world's two largest economies.
Some of the main countries the US trades with, including the EU and China, are experiencing economic deceleration, according to David Dollar, a senior fellow at the Brookings Institution's John L Thornton China Center in Washington.

"Right now the United States' growth is quite good and accelerating, whereas Europe is in danger of going into recession and China is slowing down, so it's not surprising that US exports to Europe and China fell," Dollar said.

US-China trade deficit hits record high|Politics|chinadaily.com.cn

US Economy: data disappointing with jobless setback and widening trade imbalance

The number of Americans filing new claims for unemployment benefits fell last week, but an upward revision to the prior week's figure suggested the labor market recovery remained gradual.

Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 339,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 5,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to fall to 330,000 last week.

The four-week moving average for new claims, which irons out week-to-week volatility, dropped 5,750 to 344,000. Lackluster domestic demand is preventing the labor market from generating stronger jobs growth that would decisively lower the unemployment rate.

Exports of goods and services slipped 0.2 percent to $188.9 billion in September. That was the third straight month of declines. Imports rose 1.2 percent to $230.7 billion, the highest level since November last year. Imports of automobiles and parts were the highest on record.

Additionally, U.S. nonfarm productivity rose less than expected in the third quarter and a drop in unit labor costs pointed to subdued wage inflation that should allow the Federal Reserve to maintain its massive monetary stimulus to the economy for a while.

Read more: US data disappointing

China Reports Rare Trade Deficit as Imports Jump - by Joe McDonald

China reported its biggest monthly trade deficit in at least a decade in February as imports rebounded after a Lunar New Year holiday slowdown, but a broader measure showed global and Chinese demand both weakening.

Exports grew 18.4 percent over a year earlier to $114.5 billion, up from a 0.5 percent contraction in January, when factories were idled for a two-week holiday break, customs data showed Saturday.

Imports jumped 39.6 percent to $145.9 billion, reviving after the previous month's 15 percent decline.
China's global trade deficit was $31.5 billion — the biggest since at least the 1990s and a rare exception to a recent string of multibillion-dollar surpluses.

For more: China Reports Rare Trade Deficit as Imports Jump - ABC News