The European Union (EU) is bracing for the trade war after the White House objected Brussels that to prolong the exemption granted to European steel and aluminum importers from its punitive tariffs, weeks ago, the European Commission has asked U.S. to permanently exempted 28 EU members from the additional tariffs.
Temporarily, the EU companies enjoy the exemption of 25% tariff on steel and 10% tariff on aluminium, and the short-term “benefit” will be due on 1 June.
Last week in Sofia, EU leaders reached the agreement to increase the amount of natural gas the US can import to Europe, reciprocal access for industrial products, including cars, and discussions on WTO reform, if the White House was to lift the threat of tariffs.
Among the EU members, Germany seems the biggest victim in tariff and has argued for a patient and generous response to the US’s threats.
When the trade talks between U.S. and China on stage, China’s concession to buy more U.S. goods as part of a deal to ward off a trade war is putting Germany on the spot. For seeking China’s united front against Trump on trade, Chancellor Angela Merkel headed to Beijing on May, 22 to meet president Xi, at a time of escalated trade tensions with the U.S.
“Both countries are in agreement that open markets and rules-based world trade are necessary.” Merkel’s spokeswoman revealed the main focus of this trip.
As the biggest European trading partner of China, Germany contributed almost $179 billion in 2017, but now stands in the breach to suffer the impact of any reduction in business. China benefits Germany as the big buyer of Made in Germany. However, China’s trade deal with U.S. leaves Germany squeezed in middle and makes it the main target of the U.S. against foreign imports.
“China will buy more and more products from the U.S. that we might have otherwise bought from Europe or other partners,” said Wang Yiwei, a former Chinese diplomat in Brussels. “This will certainly have a spillover effect.”
In the morning discussion held on Thursday between Merkel and Chinese Premier Li Keqiang, who said China-Germany relations were “developing steadily at a high-level,” but that “the current economic and political situations in the world are complex.”
Merkel and Premier Li Keqiang affirmed their past success in searching answers to issues between two countries and emphasized the necessity for regular discussions on issues of human rights, science and technology.
“And then our conversations can center on really where are there still problems, what are the solutions, what are the opportunities. Then we can play our part in a global, multilateral system,” Merkel said.
Except for the U.S. – China trade issue, Merkel’s aim of the trip also stressed on other subjects like Iran deal, market access, bilateral trade and North Korea.
Merkel’s China trip follows the high-level dialogue in Washington between U.S. and Chinese delegation that have relieved tensions to some extent between the two countries. Before heading to China, Merkel said her talks with Beijing will focus on the issues such as the rule of trade disputes, law, and economy.