The administration is taking the action in response to complaints from US farmers who fear that US President Donald Trump's tariff policies will result in a trade war. EU-US trade relations have been tense ever since Trump imposed high tariffs on steel and aluminium imports in June.
The European Union imposed its own barriers on US goods after Trump lifted the EU's exemption from those tariffs, Sputnik previously reported. Earlier this month, the Trump administration also imposed steep tariffs on $34 billion worth of Chinese imports, and China responded by imposing tariffs on American agricultural commodities, including pork and soybeans. China's yuan continues to slip against the US dollar as the Chinese central bank continues weakening the national currency to offset trade losses.
Jack Rasmus, a professor of economics at Saint Mary's College of California, discussed the US trade war with the European Union and China on Radio Sputnik's Loud & Clear Tuesday.
"It's a very complex situation. Are we in a trade war?" Rasmus asked host John Kiriakou.
"Well, you've got to distinguish between political threats about imposing tariffs from actual announcement of tariffs to actual implementation of tariffs. If you look at where we are right now, the total number of tariffs that the US has imposed is only 2.3 percent of the US' $3 trillion worth of imports, and the trade adversaries have imposed a similar 2.3 percent; so we aren't in a trade war yet, but we are coming real close," Rasmus told Radio Sputnik.
"A trade war uses all kinds of instruments, not just tariffs but also currency devaluations. Once a tariff war precipitates into a currency war, and we are coming close to that, then we have a real trade war. If the Chinese currency devalues any further, that will send a signal to other countries to devalue as well, and now you've got a full blown currency war, and it doesn't matter what tariffs you've imposed because its more serious," Rasmus added.
"They've been taking the legs out from under America's farmers and ranchers," Sen. Ben Sasse (R-NE) said Wednesday, CBS news reported. "What the administration is offering them instead is $12 billion in gold-plated crutches. That's not what anybody wants."
In fact, Rasmus referred to the $12 billion in emergency aid to American farmers as "agribusiness corporate welfare."
"It's shifting money around. They [the Trump administration] are going to have to take it out of food stamps, and they're going to have to exacerbate the budget deficit even further," Rasmus told Sputnik.
In an interview with CNBC last week, Trump said that a strong dollar "puts us [the US] at a disadvantage," adding that "Chinese currency is dropping like a rock."
The US president also noted that he is not excited by ongoing interest rate hikes by the Federal Reserve, but he allows the American central bank to do what it thinks is most appropriate.
"I'm not thrilled," Trump told CNBC. "Because we go up and every time you go up they want to raise rates again… I am not happy about it. But at the same time, I'm letting them do what they feel is best."
"The Chinese currency is devaluing because the American currency is rapidly appreciating. Why is the dollar rising? Because US interest rates are rising. Why are US interest rates rising? For the Federal Reserve to fund Trump's trillion dollar annual deficits. Why do we have annual deficits? Because of Trump's $5 trillion dollar tax cuts. So, Trump is causing devaluation of the Chinese yuan," Rasmus said.