U.S. President Donald Trump decided not to implement import tariffs for European goods for six months as the next frontier in global trade wars might hurt the economy. Experts predict the significant consequence of the U.S. economic growth as the impact of U.S.-China trade war and new restrictive measures for Chinese goods worth $250 billion is still unknown. Analysts note that American consumers will suffer the most as they already got used to cheap products from China, while consumer spending could drop after new tariffs were imposed and prices jumped for 25%. Therefore, another spike of prices for European and Japanese cars and automotive parts was postponed amid a high level of dependence by local American automakers, especially from imported parts.
Import tariffs were offered by national agency and investigation in February which made a conclusion that imported cars might threaten national security. Trump was exactly the person who ordered that investigation and clear results of it are in doubt. U.S. President agreed with the investigation’s conclusion, but he suddenly changed his mind, trying to arrange a deal with the European Union. U.S. International Trade Representative Robert Lighthizer has got a task to work on the deal and prepare negotiations with foreign partners.
On the other side of the Atlantic, European officials warned that mirror measures would be implemented and U.S. imports to the Eurozone would be restricted as an answer to possible pressure from the White House. Germany is the leading EU economy and the level of exports traditionally depends on the automotive industry as the U.S. market is the largest region for German corporations. The European Union is ready to discuss a limited trade deal with American partners, however, current negotiations are stuck in the middle of nowhere as both sides still do not have a compromise on deal conditions.
ING economists warn that the threat of full-scale trade war is still on the table and that development of protectionism measures could hurt the global economic growth. The main requirement from Trump’s administration is to get access to European and Japanese agricultural markets. If Japan could afford such a step, the EU traditionally protects local farmers with a high level of subsidies, while European consumers mostly prefer local food products instead of imported. Moreover, every single country of the Eurozone should be involved in negotiations as the EU does not have authority for such a decision, which makes potential deal almost impossible.