How long does Trump remain in post-Trump America? We will find out in the coming weeks. In the excitement of the dismantling of the former president’s dogmas on the climate and the great boost to welfare, contained in the newly approved 1.9 trillion dollar stimulus package for the economy, it remains, in fact, under the surface of the water. most genuinely Trumpian legacy: the tariff wars. And in Brussels as in Washington, we are realizing that the two transatlantic partners who have just met are irresistibly sliding towards a new commercial escalation.
On June 1, barring any news, the EU will double the tariffs in place for two years on some hyper-American exports, such as bourbon and jeans. It is the legacy of the protectionist offensive that has characterized all four years of the Trump presidency. Last week, Washington and Brussels signed a truce on the Airbus-Boeing chapter, freezing the tariffs that one had imposed on the other for 4 months, in retaliation for the subsidies that the Americans give to Boeing, the Europeans to Airbus. But that was the easy part, if only because the ground is tight and there is room for an exchange. The knot is the 25 percent tariffs imposed by Trump in 2018 on steel and aluminum imports, based on shaky national security reasons.
The EU reacted with indignation, believing it had been unfairly targeted by the White House. And it imposed its own counter-duties of 25 percent on iconic American products such as bourbon, jeans, Harley Davidson motorcycles. The key point is that the European tariffs have been introduced with a real decree, which establishes that, if Trump’s tariffs are still in force on June 1, the European tariffs will double: the tariff on bourbon, for example, will pass 25 to 50 percent. It is not something to be decided: the doubling of tariffs, the decree says, is automatic.
But surely Biden will put his hand to US tariffs on steel, putting an end to the dispute, right? On the other hand, it is not at all certain, pointed out a newspaper in the gears of American politics, like Politico. Biden snatched the Midwestern industrial belt from Trump in the November elections, but only to a limited extent and many doubt that he wants to oppose the workers’ vote that, in 2016, Trump managed to mobilize precisely by evoking protectionism. In reality, many economists believe that the favor done to the steel industry with tariffs is a sort of own goal, because the rest of the economy has paid more both with European tariffs and above all with the increase (it is the case of the car industry) of internal costs. But the political logic does not always coincide with the economic one. Gina Raimondo, Biden’s new trade secretary has already noted that the tariffs “have been effective” in stopping the import of steel from abroad. Nor does the new White House representative in trade negotiations, Katharine Tai, seem eager to take the steel lobby head on: “We have to maintain a strong steel industry,” she told Congress.
Collision is not inevitable. The problem of global overcapacity in steel production does not originate in Europe, but in China and this explains the resentful reaction of Brussels to Trump’s tariffs. Tai herself makes it clear that the issue must be framed in the dialogue that has just been restarted with the “allies” which focuses precisely on the relationship with China and the subsidies with which Beijing grants its export industries, including the steel ones.
But it is a long-term job, while the automatic doubling of European tariffs is just around the corner. Not exactly the novelty that can calm the minds, before the confrontation explodes at the WTO in the autumn, where it must be decided whether these American tariffs, rather than the European counter-tariffs, are legitimate.
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