Trans-Atlantic panic as brewing US-EU trade war threatens ties

Any failure of the US and Germany to come to terms exposes growing rifts between the two increasingly divided Western economies

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BERLIN – Germany, as the largest European exporter to the United States and with over a million jobs directly or indirectly associated with these exports, desperately wants to avoid any EU trade war with Washington. But a trade war between the US and the EU is brewing, and likewise, tensions between Germany and other EU members have also grown in recent months.

By June 1st, Trump’s policy which provides the EU with an exemption from US customs duties on steel and aluminum imports, is set to expire. Berlin has called on several occasions to European partners to show some flexibility and continue with the implementation of a comprehensive trade agreement which benefits both sides.

This, however, leads Germany to “wage war” in turn with European partners such as France, which is hurt by Germany’s high trade surplus and wants a firmer EU stance toward US customs.

“This increases the risk of starting a trade war” president of the German Foreign Trade Association BGA, Holger Bingman, stated and he warns that the EU should not threaten with countermeasures.

“In this way, Europeans will only accept the logic of protectionism” he said.

A slow but growing rift between the EU and US has steadily risen since the introduction of the Euro several decades ago, where developing countries began to include Euro reserves alongside USD reserves in order to diversify their accounts. In perhaps the most well-known example, the US campaign against Ba’athist Iraq under Saddam Hussein was in large part realized after the Hussein led government announced that it would be replacing USD currency reserves with USD. We may recall that at the time, EU leaders including those of France and Germany, opposed US intervention in Iraq.

The European Commission recently announced that the EU will impose duties on a number of imports of US goods valued up to 2.8 billion euros, if European exports of metals into US, with value of 6.4 billion euros, are subject of tariffs. This down-ward spiraling reciprocity is what experts and analysts fear my unravel into an all-out trade war.

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The development of the EU currency rose in tandem with the advancement of western interests and control structures into post-Soviet and post Yugoslav-space, mirroring the advancement of NATO.

But as the EU’s internal economy began to solidify and behave increasingly as a single sovereign economy, largely dominated by Germany, and partner France, American business interests and European business interests have increasingly found themselves at odds.

Further contradictions between the two Western economies have been exposed over the course of the New Cold War waged by the US on Russia. Both before and despite the sanctions regime on Russia, a significant portion of EU business elites built a business model on relatively open trade with their Russian partners and neighbors. Prior to the sanctions, the balance of EU-Russia trade was more than 500% greater than US-Russia trade, meaning that the US initiated sanctions regime was as much aimed at forcing EU firms to trade with the US, as it was about isolating Russia.

That there is a growing consensus among EU business and political elites, that the EU must forge a balanced policy between the strong Trans-Atlantic relationship which saw its zenith in the second half of the 20th century, and its growing relationship with countries like Russia and China.

In response, the US has developed a policy of exploiting differences between EU member-states.

This gives us some insight into the concerns of German Economy Minister Peter Altmaier, who stated that finding a common position with France and making an assessment of a bid that will be delivered to the United States is “equally difficult” for both sides.

As the 1st of June is approaching, EU trade ministers will have to settle frictions quickly in order to give Cecilia Malmström, the European Commissioner for Trade, a mandate for negotiations with the US administration.

German exports to the United States reached 112 billion euros last year, which is twice as high as the next largest EU member country exports, according to official Eurostat statistics.

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