/ 23 July 2018

EU’s Juncker in last-ditch bid to end Trump trade war

EU Commission head Jean-Claude Juncker.
EU Commission head Jean-Claude Juncker. (Frederick Florin/AFP/Getty Images)

European Commission (EU) head Jean-Claude Juncker heads to Washington on Wednesday in a last-ditch effort by Europe to cool nerves and find an exit door from an all-out trade war with US President Donald Trump.

Juncker, a grizzled veteran of EU politics, follows a long list of European leaders, including German Chancellor Angela Merkel, who have tried to lure Trump him away from a protectionist onslaught that has spooked financial markets and the world.

The former Luxembourg prime minister is going to Washington without a negotiating mandate, but with the intention of thinking “outside the box” to “find a solution” with Trump, said EU trade commissioner Cecilia Malmstrom, who will join Juncker on the trip.

At stake is a White House threat to slap a daunting wave of tariffs on European auto exports to the US, an action that the Europeans say would trigger a global economic earthquake and earn a withering riposte from Brussels.

If confirmed, Trump’s auto tariffs would add to the steel and aluminium tariffs imposed in June that seriously damaged transatlantic relations already frayed by Trump’s pullout of the Paris Climate accord and the Iran nuclear deal.

In response, the European Union on June 22 imposed a raft of retaliatory tariffs that targeted the most emblematic of American exports, from blue jeans to Harley Davidson motorbikes and whiskey.

Fearing car tariffs, Brussels is already drawing up a list of more US products that could be hit with retaliatory duties if Juncker’s trip fails.

“We will continue to respond toe-to-toe to provocations,” Juncker warned in a speech on Wednesday.

“All efforts to divide Europeans are in vain,” he added.

‘Gun to the head’

Juncker’s commission handles trade matters for the EU 28 and he goes to the White House with the firm backing of Merkel, the leader of export powerhouse Germany, a country that Trump has angrily singled out for punishing the US on trade.

Merkel expressed hope on Friday that Juncker could negotiate a solution with Trump and stop the trade war.

Tit-for-tat feuding between the allies would be “by far the worst-possible solution”, Merkel warned, describing the current trade tensions as “very serious”.

The potential car tariffs would not just violate the rules of the World Trade Organisation, she added, but could also “endanger the prosperity of many people around the world”.

But the prospects for trade peace seemed slim at G20 talks on Saturday after US Treasury Secretary Steven Mnuchin, a close Trump ally, said Washington would demand a wide-ranging trade deal with Europe in order to stand back on its tariff threat.

“If Europe believes in free trade, we’re ready to sign a free trade agreement with no tariffs, no non-tariff barriers and no subsidies. It has to be all three,” said Mnuchin at the talks in Argentina.

But French Finance Minister Bruno Le Maire shot back firmly: “We refuse to negotiate with a gun to the head”, insisting that Trump must first withdraw the steel and aluminium tariffs and stand down on his car tariff threat.

‘Not for long!’

Not to be daunted by Trump’s protectionism, Juncker last week toured Asia, signing the EU’s biggest ever trade deal with Japan while also backing multilateralism alongside the Chinese government during a stop in Beijing.

The EU — the world’s biggest single market with 28 countries and 500 million people — has also secured similar trade deals with US neighbours Canada and Mexico.

Also looming over the Juncker visit is last week’s decision by the commission to slap US tech giant Google with a record fine over its Android mobile phone operating system.

Trump lashed out at the 4.34-billion euro ($5-billion) penalty and warned: “They truly have taken advantage of the US, but not for long!” Trump said.