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European Union excluded from US tariffs

Disclosure - 26 March 2018
European Union

Donald Trump: 25% tariffs on steel do not affect “friendly” countries.

The European Union is one of Trump’s “friendly” countries and is therefore excluded from protectionist policies on steel imports, policies that have instead heaped another $60 billion in trade sanctions on China.

It is highly likely that Trump’s choice implies an expectation of “reciprocity” and implies concessions by the European Union on the circulation of American products. At the moment, however, it seems we should be satisfied, and positive reactions from some European leaders such as Macron and Gentiloni have been forthcoming.

However, the European Union is not the only one to have been excluded from the US trade clampdown. South Korea, Brazil, Argentina and Australia have also been excluded from the US tariffs, leaving China alone in the crosshairs, and the effect was immediately highlighted by the response of the Asian stock markets, which literally plunged after Trump’s announcement.

Data from 23 03 2017:

  • Shanghai closed at -3.39%
  • Shenzhen lost even more, -4.49%
  • Tokyo, with the Nikkei losing 4.51%

On the currency side, the dollar fell below 105 yen for the first time in the “Trump era”, as it also fell against the euro which was trading at 1.235 dollars.

However, China’s response was not long in coming, with Vice-Premier Liu He reiterating that Beijing will defend its interests and pointing out that Trump’s action violates international trade rules and seriously jeopardises the stability of bilateral trade relations.