Trump's Trade Spat With EU, Canada, Mexico a Sideshow to China – Trade Lawyer

EU chief Jean-Claude Juncker has met President Trump in Washington in a bid to avert a trade war. Ahead of their meeting, Trump tweeted that perhaps the US and the EU would be better off if they both dropped all tariffs, barriers and subsidies on one another's markets. Speaking to Sputnik, trade attorney Daniel Ujczo explained Trump's real goal.

Sputnik: What do you make of President Trump's desire for the mutual cancellation of tariffs between the US and the EU, given that he began this tariff spat in the first place?

Daniel Ujczo: There are two things in play right now. The first is our policy here in the United States. There are key people in the White House – Treasury Secretary Steve Mnuchin, the pro-trade, pro-business side of the White House, coupled with the pro-business community in Washington, the think tank community and others who realize that the president isn't going to give up on tariffs. But perhaps the end game here should be to 'go big', to do something big and dramatic, which we know the president likes. They've given up on stopping him from putting tariffs on. What they're trying to do is convince him to remove tariffs. It's really a domestic 'get in the president's ear' [scenario] to get him to do something big like removing tariffs elsewhere…

This is a very important week in Washington on trade because beyond the European Union coming, the Mexicans are coming to town to talk NAFTA. We're in the middle of hearings on China tariffs, and there's a lot of testimony on Capitol Hill. Peter Navarro, the president's top advisor on trade, along with Robert Lighthizer, the US trade representative, are both going to be in front of Congress this week. So we really [should get some idea] of whether this is going to be a short-term series of trade disruptions or whether we better buckle up to go in for the long-haul here.

Sputnik: What do you expect from the European Union on the trade issue?

Daniel Ujczo: I think there has been some mixed signaling, and that there's one of three options. The first option that we have to be prepared for is that nothing happens. If the Europeans come with relative talk, there's a chance the president may not even meet if there's not a nice juicy red deal on the table. We have to be prepared for that scenario.

The more likely scenario is a mid-range deal, where we try to deal with the autos issue; what's in the crosshairs right now is the European Union's 10% tariff on US automobiles. That's something that the president just really has in his crosshairs right now. So I think the discussion should focus on that.

If we don't reach an agreement relatively soon, the US can be expected to put tariffs on foreign auto imports sometime in August. So I think it's very important to try to strike this deal now.

[Finally] of course there is the 'swing for the fences' approach – the third option would be that the European Union comes and perhaps tries to restart some type of broad trade talks, where we would reduce all tariffs, subsidies and quota systems. That is really a more long-term approach, because it is very difficult to do politically; a lot of companies in both the EU and the US rely on those subsidies and quotas.

So my view is that we'll probably be talking autos by the end of the day.

Sputnik: US tariffs have of course hit countries beyond the EU and have affected Canada, Mexico, and China as well. How likely is the US stance likely to change with regard to these other countries? They will surely be watching this week's negotiations between the US and the EU very carefully.

Daniel Ujczo: Yes, the goal here over the coming weeks and months is that the US is going to try to resolve its issues in our backyard here with Canada and Mexico via NAFTA, then talk with the European Union. I think there is an effort to try to start bilateral talks with Japan…

The US is prepared I think to go the distance with China. We saw yesterday that the US announced subsidy programs for the agricultural community of up to $12 billion. That should be a signal to the international community that the US is ready to take this trade fight the distance. 

I think the goal is to resolve those other issues, but at the end of the day, the major target for the United States is China and dealing with the trade imbalances there. There is a great deal of support for that from the business community. So we have to settle these other issues along the way. It starts with our backyard in North America, and I think the European Union will be shortly thereafter, and then starting to look at new markets – setting up a trade deal with Japan for example. The US is really focused on Africa as well in terms of starting getting some trade deals there. But I don't think we're going to see a resolution to the China issue anytime soon. 

Daniel Ujczo is an international trade and customs attorney focusing on Canada-US matters. The views expressed by Mr. Ujczo are those of the expert, and do not necessarily reflect those of Sputnik.