Trade Experts Predict Europe Will Be a 'Major Victim' on April 2
The European Union is going to be the "major victim" of President Donald Trump's "Liberation Day" on April 2, experts at the Center for Strategic and International Studies predicted.
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William Reinsch, a senior adviser at CSIS, said on a "The Trade Guys" podcast recorded March 24 that the impact is "going to be enormous, because trade with them, total trade both ways, was $1.3 trillion last year." He expects Europe to be the target of the President's ire because "he regularly rails at the EU and, in fact, accused the entire entity as being created to do bad things to the United States."
Reinsch said that the reciprocal tariff value that Trump has spoken about likely will be the average tariff rate of a country, plus the value-added tax, "plus some unspecified amount for whatever unfair trade practices the administration deems the other country to be engaging in, which really means they can pick any number they want and get away with it." This means that for the EU, "there will be 27 different numbers," he said, and that those numbers likely will not be the same.
European tariff rates "range between 15% and 27%, depending on the country," Reinsch said, and Trump will "invent different unfair trade practices in different countries." Countries from which Trump wants something, like Denmark, "because of Greenland," can expect a bigger number, while Hungary, "because he's buddies with [Prime Minister Viktor] Orban," can expect a smaller one, he said. Reinsch called this a "divide and conquer strategy," which he thinks "is aimed at trying to break up the European Union."
His co-host, Scott Miller, a senior non-resident mentor at CSIS, disagreed that Trump's end game is the dissolution of the EU, saying it's, rather, that he wants "the Europeans to stop pretending that it's 1949" when it comes to security and trade issues. He said that European trade policy has its history in the Common Agricultural Policy adopted after World War II and that American negotiators are "awfully tired" of hearing that Europe will not accept U.S. agricultural products.
Speaking before Trump announced his automobile tariffs March 26 (see 2503260077), Reinsch said that tariffs on automobiles will be "really fatal for the industry" due to the economic integration between the U.S., Mexico and Canada. If Trump's planned tariffs stack, the rates will become "prohibitive," he said.
He poured cold water on Trump's suggestion that automakers can produce solely in the U.S.: "Well, you know, they do make most of them here, as it turns out. But the decision to move here and make more production here turns out to be a really complicated decision. It takes a long time to do that."