For months, the trade war between the United States and many countries around the world has dominated economic headlines. While Trump pushes to alleviate the trade deficit by issues tariffs on trading partners, many countries push back by issuing tariffs in their own. For many, a fear exists that the trade war will escalate to a point that will significantly affect the market and the US economy as a whole. In spite of all that, a step in the right direction was made on Thursday.
On Thursday, the US agreed to forgo any more hostilities with Europe through agreeance on a deal with the European Union. The deal is poised to add increased pressure on China, one of the countries who has most vigorously pushed back against US tariffs. In the surprise deal, Washington will not propose any new tariffs on the EU, but rather, they will address the tariffs of imports of European steel and aluminum. Moreso, the EU will import more soybeans and energy from America in return for the talks.
As a result of the deal, both sides, President Trump and European Commission President Jean-Claude Juncker, declared victory. While no immediate timeline for an overall deal was struck, great flexibility was shown from both sides. Most importantly, both sides agreed that to work together to tackle China’s abuses of the market. Both the US and EU have accused Chinese companies of stealing secret information from companies.
As a whole, the US-EU pact would help curb the economic threat of China. In a statement by Larry Kudlow, Trump’s Economic Advisor, he said that the “US and EU will be allied in the fight against China, which has broken the world trading system.” He went on to say, “President Juncker made it very clear yesterday that he intended to help us, President Trump, on the China problem.”
The threat by China has been an ongoing conflict. Since Trump took office, he has pushed and implemented policies aiming to balance trade and restrict unfair competition. He launched heavy steel and aluminum tariffs against China. Furthermore, Trump has threatened to impose more tariffs as China retaliated with tariffs of their own. Unfortunately for Americans, must of the impact has fallen on US farmers.
Through it all, Trump’s top Trade Official, Robert Lighthizer, thinks it is a fight worth having. In a discussion with the Senate, Lighthizer said: “I don’t think it’s a stupid fight, I don’t know a single person that has read this report that thinks it’s a stupid fight to say China should not be able to come in and steal the future of American industry.”
In May, it appeared that China and the US were approaching a deal. In that deal, China would reduce its $350 billion surpluses and buy more goods from the US, in terms of the US agriculture and energy products. The deal did not hold of course and led to additional tariff threats from China.
Throughout the fight, there have been many up and downs. The US-EU pact is another event in the ongoing war, but it’s a step in the right direction.