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(Bloomberg) — President Donald Trump is targeting the European Union with a slew of potential punitive trade measures aimed at addressing long-standing grievances if he becomes president again, his team says. This was revealed by people familiar with discussions regarding the early-stage economic platform.
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The two countries remain at odds over increased tariffs on steel and aluminum that President Trump imposed during his first term in office, but partially suspended in 2021 after President Joe Biden took office. If Trump wins in November, the EU will definitely be one of his primary trade targets, according to conversations with multiple Trump advisers.
The starting point for a second Trump administration, allies say, will be to include the EU in broad-based minimum 10% tariffs that also apply to China. He could also use Section 301 of the U.S. trade law to put together a countermeasure to Europe’s digital services tax that implicitly targets U.S. technology champions, the allies added.
Trump supporters cited a variety of motives for the plan. This includes dissatisfaction with the EU’s reluctance to take a more proactive approach towards China, due to the EU’s own obligations towards China and restrictions on strategic investments by Chinese companies. It will be done.
Potential measures against Europe would also serve as a key component of a broader effort to overhaul U.S. trade in goods. The country has long had a large deficit with the EU, with statistics showing that the imbalance will exceed $200 billion in 2023 for the third year in a row, a pattern that is an example of unfair trade practices. President Trump’s advisers claim that there is.
“President Trump is using trade and tariffs as a negotiating tactic to get these countries to act in our interests, even in NATO,” said Stephen Moore, one of President Trump’s unofficial economic advisers. You could have seen it,” he said. He was referring to President Trump’s request during his first term for NATO allies to provide more funding for defense.
“A lot will depend on what Europe does in terms of lowering tariffs on U.S. products,” said Moore, a Heritage Foundation fellow. “We are at a trade disadvantage from the start” because the average European country imposes a value-added tax of 15% to 20%, he said. Trade experts say such tariffs will incentivize European companies to send their products to the United States, which has no domestic sales tax.
Trump campaign officials say the 10% basic tariffs are not intended entirely as a retaliatory measure, but also as a policy to strengthen America’s long-term global manufacturing position. The move would raise billions of dollars in revenue and give the U.S. government more room to cut taxes on domestic producers and others, officials said.
Read more: US trade deficit with China narrows to lowest level since 2010
Foreign officials are preparing for Trump 2.0 and are desperately trying to uncover his specific plans, according to several Washington-based lobbyists.
Trump campaign spokesman Stephen Chan said the former president “has made clear he intends to use every tool at his disposal to protect American workers.” Whether it’s auto workers, steel workers, technology workers, or farmers, he doesn’t support other countries stealing our jobs or targeting our industries for destruction. ”
The last time President Trump was in office, the EU was able to avoid a trade war over autos that loomed as the worst-case scenario for transatlantic trade relations. Lawmakers in Washington (mostly Republicans) and the American business community, with its large number of lobbyists, served as the last line of defense against that outcome.
different washington
Brussels may not be so lucky this time. Among the challenges: Many of Trump’s critics on Capitol Hill are gone, as are moderate Republicans who oversaw key committees and sought to slow Trump’s policies. It will be done.
Trump is completing his three-year term to consider his approach if he wins this November, and is likely to act quickly. In addition to the sweeping 10% tariff proposal, President Trump has also announced that his advisers are banning TikTok from entering the United States and banning electric vehicles made in China or made with Chinese parts and assembled in other countries such as Europe and Mexico. We have been talking about banning electric cars. .
Since he was last in the White House, the EU itself has taken some action against China, including launching an investigation into Beijing’s support for electric vehicles last year. Still, decisions like Germany’s move to unwind the sale of a stake in the Port of Hamburg terminal to a Chinese state-owned company demonstrate a difference of opinion with the United States.
Although transatlantic relations have improved markedly since Biden took office, his administration has not been able to lift all the trade measures taken by his predecessor. After two years of talks without a resolution to the dispute over steel and aluminum products, the two countries have decided to punt until after the 2023 presidential election.
Lighthizer’s role
The dispute targeted iconic American products such as Harley-Davidson motorcycles and Kentucky Bourbon, and resulted in billions of dollars in retaliatory tariffs by the European Union.
Robert Lighthizer, who advocated for higher tariffs as the Trump administration’s U.S. trade representative, continues to closely advise Trump on trade matters. He lives in Florida near Trump’s Mar-a-Lago resort, where he can be close to the former president during the winter months. Although Mr. Lighthizer has told his associates that he does not want to serve as U.S. trade representative again, some Trump supporters believe he could become a powerful White House chief of staff or Treasury secretary. suggests that it is possible. Lighthizer declined to comment.
In addition to Mr. Lighthizer and Mr. Moore, Mr. Trump has received broader trade and economic advice from former National Economic Council Director Larry Kudlow. Conservative economist Art Laffer. and Kevin Hassett, who headed the Council of Economic Advisers in the Trump White House. He also keeps in touch with his long-time friends and businessmen, who give him their thoughts on the economy.
What is emboldening the Trump team to use tariffs is the EU’s current challenges with rapidly increasing imports of Chinese electric vehicles. Chinese EV makers have had less success in the United States, where they face a 25% tax dating back to President Trump’s first term.
technology companies
The Trump team will also work to protect American companies from what it sees as European overreach on regulations and digital taxes.
Tech giants like Google owner Alphabet Inc., Metaplatforms Inc., Microsoft Inc., Amazon.com Inc., Apple Inc. and Netflix Inc. have employees hostile to Trump and his fellow Republicans. Mr. Trump believes these companies have been born. Former Trump aides say they grew up in the United States and that’s why they want to protect them.
This could be done, Trump’s allies said, by using Section 301 of the U.S. Trade Act to package a countermeasure to the European digital services tax that would primarily target large U.S. companies.
“The European Union is doing everything it can to cripple American companies. He’s going to stand up for us,” said Trump ally and former House Speaker Newt Gingrich. . “I know he cares about tariffs because they give him negotiating leverage.”
(Updated with comment on tax planning in third paragraph after table. A previous version of this article was corrected to remove an incorrect reference to Kudlow’s current role.)
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