President Donald Trump is threatening to start a new trade war — this time with the European Union (EU) — and impose 25 percent tariffs on all automobiles manufactured in Europe if the EU doesn’t immediately agree to approve a long-delayed trade deal with the United States.
Speaking shortly before he left the World Economic Forum in Davos, Switzerland, Trump remarked:
“The European Union is tougher to deal with than anybody. They’ve taken advantage of our country for many years.”
According to the Washington Post, Trump appears to be trying to get a European trade deal finalized as soon as possible:
“Just days after Trump scored wins with China, Mexico and Canada, the move highlighted how Trump is quickly pivoting to make Europe the next front in his protectionist trade war.
“The threatened tariffs were evidence of the growing rift between the United States and Europe, on clear display as leaders from the two continents appeared to be talking from different scripts. Trump insisted on discussing a new trade deal, while European leaders kept emphasizing action on climate change and cooperation.”
European leaders, on the other hand, were hopeful Trump would agree to also discuss other items of contention where they differ with U.S. policy:
“After 70 years of being largely hand in hand in promoting democracy and capitalism around the world, the United States and Europe are now at odds over trade, climate change, taxation, privacy, Iran and defense funding. And Trump continues to try to use tariffs to pressure European leaders to meet his demands.”
Those differences on fundamental policies are creating a deepening rift between the United States and Europe, according to Rachel Kyte, dean of the Fletcher School at Tufts University:
“Europe and America are moving slightly apart from each other. It’s not just the trade war but a fundamentally different approach to privacy and the role of business and society.”
All of this uncertainty is a threat to the overall health of the world economy, Kelly Grier, U.S. chair at Ernst & Young, a global consulting firm, noted:
“It’s almost as though there are three different models: There’s the Asia model, the Europe model and the Americas model. That is without a doubt adding complexity to business in general.”
Additionally, a new trade war could slow the U.S. economy at a time when Trump needs good economic news to assure American voters he deserves to be reelected.
Featured Image Via CNN