Published: Sat, July 28, 2018
Finance | By Jaime Brady

Trump's re-election banners could get hit by his own China tariffs

Trump's re-election banners could get hit by his own China tariffs

In what the European Union chief called a "major concession", US President Donald Trump agreed on Wednesday to refrain from imposing vehicle tariffs while the two sides launch negotiations to cut other trade barriers, easing the threat of a transatlantic trade war.

Trump hosted Juncker at the White House this week to discuss trade and tariffs less than two weeks after Trump dubbed the European Union (EU) a USA trade "foe" in a "CBS Evening News" interview with anchor Jeff Glor.

Reuters/Kevin LamarqueU.S. President Donald Trump meets with European Commission President Jean-Claude Juncker in the Oval Office of the White House in Washington, U.S., July 25, 2018.

"In regards to agricultural trade we see especially in soybeans no negotiating leeway for a trade-political agreement as oilseed imports from the United States are already free from customs restrictions", DBV president Joachim Rukwied said.

A day after the EU and the U.S. reached an understanding to defuse tensions over trade issues, Ross told reporters aboard Air Force One that no auto tariffs would be imposed while negotiations with the European Union are ongoing.

In return, "the European Union is going to start, nearly immediately, to buy a lot of soybeans ... from our farmers", Trump said.

The tweet came on the same day that Trump issued this one, amid news that his administration was starting a $12 billion plan to help USA farmers amid trade disputes.

Juncker said he flat out rejected such a move, "cognizant of the situation in Europe, not only in France but also in Belgium, in Ireland, also in Luxembourg and anywhere else", he added.

Trump also won a commitment to work together to reform the World Trade Organization to address some of his complaints about China on theft of U.S. technology, the behaviour of state-owned enterprises, and overcapacity in steel.

The U.S. has also imposed tariffs on $34 billion in Chinese products and threatened tariffs on $500 billion more in goods.

"Phase one will be to immediately resolve those issues so there will be no tariffs in either direction", Mnuchin said.

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Juncker also expressed optimism, announcing that the European Union would build more LNG import terminals to handle purchases of US LNG.

The EU will also reduce barriers and increase trade of American soybeans.

"If we hadn't had steel and aluminum tariffs, we never would have gotten to the point we are now", Commerce Secretary Wilbur Ross told reporters.

US natural gas producers have become more efficient in extracting natural gas, another factor that "would likely raise the competitiveness of US LNG", said S&P Global Platts.

Mary Lovely, a Syracuse University economist who studies a trade, said, "The Chinese are not going to be buying our soybeans, so nearly by musical chairs, our soybeans are going to Europe". As the dispute escalates, China and other importers have slapped tariffs on incoming shipments of US soybeans, dairy, meat, produce and liquor.

Commerce Secretary Wilbur Ross, briefing reporters aboard Air Force One, said more jobs have been created by the steel and aluminum tariffs than are being lost and he said the tariffs were instrumental in the European Union talks.

On Tuesday, Trump declared on Twitter that "tariffs are the greatest!"

In a sign of Trump's concern about what that might mean at the ballot box come November, the White House recently floated a $12 billion package to aid farmers.

At the same time, he recognized that the European Commission is in no position to dictate to EU member states and companies to buy more soybeans.

What he failed to mention (aside from the fact that the official text includes no formal commitments from the EU) is that this is unlikely to make a dent in America's lost trade with its largest soybean market: China.

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