The EU could be the next target for a trade war by the US, recent comments from US Trade Representative Robert Lighthizer suggest.
In a TV interview, cited by International trade law firm Sandler, Travis & Rosenberg (ST&R), Lighthizer commented on the “very unbalanced” trade relationship with the EU and a bilateral trade deficit that could hit US$180bn for 2019.
President Trump has said lowering the US trade deficit is a key objective, and the deficit with the EU is typically the US’ second-highest each month, about half that of China and twice that of Mexico. Trump recently concluded agreements that could bring down the US trade deficits with those two partners, and Lighthizer asserted that “you can’t get the global trade deficit down without getting the trade deficit down with Europe.”
Lighthizer indicated the US will use the threat of higher import tariffs as it has with China. “There are a lot of barriers to trade [and] a lot of other problems we have to address,” he said, including figuring out “a way to sell more” to European countries.
As part of that effort, the US will “continue to focus” on its utilisation of tariffs on EU goods.
In December, the US said it was considering additional tariffs on EU goods in an ongoing row over aircraft subsidies, building on a move earlier in the year that saw some clothing exports hit by additional duties of 25%. In October, the US slapped tariffs on US$7.5bn worth of goods it imports from the EU including clothing. The decision came after it was given the green light by the World Trade Organization to impose tariffs ranging from 10-25%.
However, the EU Commission subsequently proposed a move that gives the bloc more freedom to impose countermeasures when it feels trade partners “do not play by the rules”.
In December the Commission announced a proposal that would eliminate the requirement that a dispute go all the way through WTO proceedings before the EU can respond with steps such as increasing tariffs or imposing quantitative restrictions or public procurement restrictions. The proposal could come into effect by mid-2020 if approved by the European Parliament and Council.
