Trump relaunches trade battle with Europe

US president Donald Trump.
US president Donald Trump.
Image: REUTERS/Jonathan Ernst

US President Donald Trump relaunched a major trade offensive against Europe yesterday, threatening to hit the EU with damaging vehicle tariffs if Europeans failed to agree to a long-delayed trade deal.

“The European Union is tougher to deal with than anybody. They’ve taken advantage of our country for many years,” Trump told Fox Business News on the sidelines of the World Economic Forum in Davos.

“Ultimately, it will be very easy because if we can’t make a deal, we’ll have to put 25% tariffs on their cars,” he said.

Trump said his attention would now to turn to Europe, after he sealed a trade truce with China after several years of a trade war that destabilised the world economy.

“I wanted to wait till I finished China, to be honest with you. I always like to be very transparent. I wanted to wait till I finished China.

“I didn’t want to go with China and Europe at the same time.”

Trumps comments followed a warning by US Treasury secretary Steven Mnuchin that Washington would deliver on long threatened vehicle tariffs if Europeans go through with a digital tax that mainly targets US firms.

“If people want to arbitrarily put taxes on our digital companies we will consider putting taxes arbitrarily on car companies,” Mnuchin told a panel at the four-day talkfest.

EU-US trade relations deteriorated soon after Trump came to power three years ago and declared a war against the yawning trade deficit with Europe.

The earliest transatlantic skirmish came when Trump imposed tariffs on steel and aluminium imports, notably from the EU, which responded by taxing iconic US products, including denim jeans and motorcycles.

Trump then threatened duties on European cars, which is of particular concern to Germany, but has so far backed down under the pressure of US legislators.

The US and EU agreed to pursue a trade deal in July 2017 as a tentative truce, but negotiations have stalled over farming.

Trump’s comments came a day after he said he had held a positive meeting with new EU Commission President Ursula von der Leyen on working towards reaching a US-EU trade pact.

A French diplomatic source said at the weekend that French President Emmanauel Macron and Trump had agreed in telephone talks to give negotiations a chance to avoid “a trade war that will benefit no-one”.

Washington had also moved to ease tensions on other trade fronts.

This month, the US Senate voted to approve a new trade agreement linking the US, Canada and Mexico.

The US and China also signed a long-awaited, if partial, deal to ease trade frictions.  — AFP