On June 1st, the Trump administration began to impose a 25% import duty on steel and a 10% duty on aluminum in Europe, Mexico and Canada. In response, The European Union (EU) had introduced retaliatory tariffs on €2.8bn ($3.4bn) worth of U.S. goods, which took effect on June 22nd.
European Commission President Jean-Claude Juncker said duties imposed by the US on the EU go against “all logic and history”, we will do what we have to do to rebalance and safeguard the EU.
The EU list covers about 200 categories of typical U.S. products also including various types of bourbon whiskey, tobacco, cranberries, orange juice, Harley motorcycle, jeans, cosmetic, boat and steel. It’s likely that the list was designed to maximize the political pressure on Trump and U.S. politicians. This move can be described as a precision strike.
The food, beverage and consumer goods industries have 2.1 million employees in 30,000 communities across the United States and are the largest source of employment in the U.S. manufacturing industry. Food, beverage and feed exports are critical to the U.S. economy and totaled 133 billion U.S. dollars in 2017.
The United States ships more than 95 million pounds of cranberries to EU countries each year. Nearly 40% of crops are exported, and Wisconsin has accounted for more than half of the global supply of cranberries for several years. For cranberry growers, the tariff threats in 28 EU countries are particularly bad, and growers are in trouble because of too much fruit and low prices. Tom Lochner, executive director of the Wisconsin State Cranberry Growers Association, said: “This will seriously hinder our ability to compete in these markets.”
Meanwhile, the whiskey industry isn’t happy, either. Over the past two decades, American spirits exports have increased from 575 million U.S. dollars in 1997 to 1.64 billion U.S. dollars in 2017, a rise of 185%. The sudden impact in the important European market has caused American whiskey suppliers’ suffering. However, American whiskey can also be redirected to other major spirits consumer markets such as China, Canada and Mexico. What makes it more worse is the pessimistic trade relationship between the United States and these countries under the trade war leaves gloom to the future development of the American whiskey industry.
The above are just two examples of the impact of EU tariffs on the U.S. industry. But now the worrying thing is that Trump threatened to go further by placing a 20% tariff on all imported EU cars.
Based on the Tariffs and Trade Barriers long placed on the U.S. & its great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!
— Donald J. Trump (@realDonaldTrump) June 23, 2018
Trump’s tweet spread to the entire financial market, downgrading the shares prices of BMW, Volkswagen, Fiat Chrysler and Mercedes-Benz manufacturer Daimler. After this news, share prices of Ford and General Motors also fell. If the fire is extended to the automotive area, it will inevitably cause a severe blow to the EU economy.