Trump seems more and more ready to tackle the EU in its trade war

u.s. president Donald Trump has accused China and Europe to manipulate their currencies, which could leave the possibility of an intervention of the Treasury to weigh on the Dollar, a possibility that we were talking about this morning.

But the criticism of Trump yesterday evening can also leave the fear that Washington will put its threats excécution, after having been repeatedly warned of its intention to impose customs duties on certain goods from the EU.

“The allegations of manipulation of the Euro will increase the part of the White House with discussions on tariffs on the EU, while the EU already speaks of counter-measures, exacerbating trade tensions between the two regions,” said Robert Carnell, chief economist at the ING bank (AS:INGA).

Recall that in a tweet published yesterday, Donald Trump said that ” China and Europe are playing a game of handling money and injecting money into their system to compete with the USA. “

He then called for the easing of the monetary policy, adding that the United States should “match” the monetary policies of China and Europe :

However, the monetary policy is not the purview of the presidency, despite the many criticisms and attempts to influence Trump in respect of the Fed, and failing to see the Dollar fall, he might want to rebalance the scales using customs duties…

It is not necessary to forget that at the end of the month of may, the department of Commerce of the United States had proposed tariffs on goods from countries that had under-valued their currency relative to the dollar.

“This change puts the foreign exporters warned of the fact that the Commerce department can impose countervailing duties on the monetary subsidies that harm u.s. industries,” said the Commerce secretary, Wilbur Ross, in a statement.

Several analysts have stated that a weaker euro may push Trump to implement all the past threats of tariffs on european products – in particular in the automotive sector.

“What most concerns us here, is that Trump will have the intention to impose “compensatory rates” for the european automotive sector in the coming months, supported by the fact that the department of Commerce recently granted the power to do so in the face of what it considers to be countries that keep their currency artificially low, ” said Ray Attrill, head of foreign exchange at National Australia Bank.

Trump had threatened since last year to impose a customs duty of 25 % on imports of cars originating from the European Union, which according to some analysts, could push the Germany, and possibly the whole Euro Zone into a recession.

On Monday, the u.s. government had threatened to impose tariffs on an additional $ 4 billion of EU goods, including olives, Italian cheese and whisky.

Finally, one last detail recent could weigh in the balance in favor of customs duties in the US against the EU.

Last Sunday, the EU signed a trade agreement with Vietnam, its 16th-largest trading partner, removing 99% of customs duties on products imported from Vietnam to the EU.

However, Vietnam is also in the sights of Trump. In an interview with Fox Business at the end of June, Trump considered that the trade with Vietnam is still less favourable than the trade with China, stressing that the country benefits more widely for the relocation of businesses from China to avoid the tariffs the US. He had of course also left raised the threat of tariffs.

See Europe developing closer ties with Vietnam, its worst trading partner, could in fact irritate the US president to the point that it will put its threats in execution, both to Vietnam and to the EU…

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