With the announcement of new tariffs on steel and aluminum, U.S president Donald Trump is setting the international community up for a trade war. At least that seems to be the conclusion that EU leaders are drawing from the announcement. Instead of trying to find a diplomatic solution, the Juncker Commission is taking a confrontational stance.
Tariffs as political powerplay
As a reaction to Trump’s steel tariffs, EU Commission president Jean-Claude Juncker announced that the union will impose customs duties on American bourbon, blue jeans and Harley-Davidson motorcycles. Juncker also stressed that this process is “stupid”, but that Europe is forced into “being this stupid”. These three goods in particular are of course chosen out of purely political reasons: they are inherently associated with American goods, and none of them are seriously competing with European products. However, political tariffs have the same effect as economic ones.
It needs to be said: retaliatory tariffs are sanctions. Nothing more, nothing less. There is no difference between import restrictions on goods from Russia for humanitarian reasons and import restrictions on the U.S for political reasons. Furthermore, if Jean-Claude Juncker openly admits that the process is “stupid”, because economic prosperity is hampered in both the country that issues the tariffs and the country they are issued upon, then how are they purely “retaliatory” anyway? Is the European reaction to a self-damaging policy that we are therefore also going to damage ourselves? Most importantly though, it is disconcerting how quickly the European Union was ready to take these measures, when it usually takes months and years to analyse and outweigh the costs and benefits of each individual measure.
What did the UK do?
Back in September, Trump had the less than wonderful idea of putting tariffs on aeroplanes of a passenger capacity between 100 and 150 seats, which was nothing but an import tariff on the Canadian aeroplane manufacturer Bombardier, which competes with Boeing in the United States. The tariff risked tripling the cost of purchasing the new C-series planes for American airline companies such as Delta, they reconsidered the purchase. The wings of these said planes are produced in Belfast, Northern Ireland, which is why UK Prime Minister Theresa May also criticised the move. No talk of retaliatory measures though.
At the end of January, the U.S International Trade Commission decided that Bombardier planes did not harm the U.S industry and struck the measure down. Theresa May happened to be right on her position of negotiating with Trump, instead of chosen the road of a trade war.
In the disillusioned idea of standing up to Trump,Jean-Claude Juncker, on the other hand is willing to engage in trade wars. Brussels is drafting a longer list than the initial three items: t-shirts and orange juice will also be taken on by the EU, unless Trump’s drops the idea of going through with tariffs on steel.
Take the moral high ground on trade back
You’d think that if the European Union were able to defend one European value, it would be that of free trade. It constantly revels in the greatness of the single market and the wonderful frictionless trade relations. When Trump’s protectionist rhetoric was at its peak earlier last year, Jean-Claude Juncker and EU Council president Donald Tusk took pictures with Japanese Prime Minister Shinzo Abe and agreed on freer trade with the Asian island. The message: in a time of American protectionism, Europe is taking the moral high ground on trade. At the G20 summit back in July, Politico Europe even went so far as to title that Juncker was “giving Trump a crash course on free trade”. How things change.
If the European Union really wants to be the positive force for free trade in the world, that’s good! All power to it, then. But actions speak louder than words. Not only is the European Union very protectionist in its own way when dealing with countries that are not member of the club, it also manifestly behaves childish in the face of these Trumpian tariffs. Instead, it should look at diplomatic solutions to the announced tariffs.
Europe needs to take back the pretended moral high ground on trade, and it should do so by leading by example.
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