Donald Trump set to turn all trade war fire on China after US deal with EU to suspend tariffs
Both sides agree to suspend tariffs in deal that leaves Washington free to focus on dispute with China
China is set to become the focus of Donald Trump’s global crusade for “free and fair trade” after reaching a deal with the EU to suspend new tariffs and expand European imports of US goods.
Both sides pledged on Wednesday to lower some industrial tariffs and increase Europe’s purchases of US soybeans and liquefied natural gas – both potential weapons for Beijing in its trade war with Washington – while moving to re-examine existing US tariffs on steel and aluminium and retaliatory ones from Europe.
The deal between Trump and European Commission President Jean-Claude Juncker eases months of escalating tensions between the US and Europe, pitting Washington against not only its strategic competitors like China but also historical allies in the West.
But it now pivots the White House focus on to its escalating trade war with China, where negotiations have stalled over billions in tariffs and retaliatory tariffs, with duties on an additional US$200 billion of Chinese goods set to be enacted in August.
“[The] trade war has probably now turned [to a] 100 per cent focus on China,” Stephen Innes, head of Asia-Pacific trading at New York-based foreign exchange company Oanda, said in a note to his clients. “Keeping in mind that the US and the EU continue to share intellectual property grievances against China at the [World Trade Organisation].”
While Beijing courted Europe to take its side against the US on the trade front during high-level meetings earlier this month, Europe continues to share US concerns about Chinese industrial policies such as its “Made in China 2025” plan to leapfrog into a technological superpower, said Julian Evans-Pritchard, senior China economist at London consultancy Capital Economics.
“The Chinese have not fully succeeded in really winning the EU over to their side,” he said.