On June 22 Europe's retaliatory measures in response to Washington's steel and aluminum import tariffs came into effect, prompting many to ask who is set to lose the most from the looming trade war.
"The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side. Our response is measured, proportionate and fully in line with WTO rules. Needless to say, if the US removes its tariffs, our measures will also be removed," Commissioner for Trade Cecilia Malmström announced on June 20.
According to the European Commission's estimates, EU steel and aluminum exports affected by the US measures were worth €6.4 billion ($7.45 billion). In March, 2018 the Trump administration signaled the imposition of 25- and 10-percent tariffs on steel and aluminum, respectively. The tax hike was applied to Europe on June 1.
Europe's retaliatory taxation is due to hit a wide range of US exports ranging from steel to clothing and orange juice.
Are EU-US Trade Ties As Strong as Ever?
The US market has long been seen as a primary destination of European goods and services. According to Eurostat, the US was the largest partner for EU exports in 2017 and the second largest for the bloc's imports. At the same time, Germany emerged as the largest exporter to the US among EU member states.
Commenting on the US-EU trade spat, Deutsche Welle argues that "goods slapped with tariffs only make up a small percentage of total trade between the two sides."
According to the media outlet, when it comes to EU exports to the US, which totaled €376 billion ($435 billion) in 2017, €6.4 billion ($7.45 billion) in tariff-hit goods pale in significance. Vice versa, €2.8 billion ($3.2 billion) worth of US goods subjected to EU duties stand nowhere near total US exports to the bloc, which amounted to €256 billion ($297.8 billion).
The media outlet further pointed out that the EU's major exports to the US consist of machinery, packaged medicine, vehicles and medical and pharmaceutical equipment not targeted by the Trump administration's tariff spree. It added that Germany, which accounted for 30 percent of all EU exports to the US in 2017, views North America as its largest single export market for cars.
Trump's Global Trade 'Reshuffle': There Will be No Winners
However, the problem is that the US trade frictions with the EU are just part of Washington's global trade "reshuffle."
In a sudden twist of fate, German carmakers Daimler AG and BMW were hit by the ongoing US-China tariff war. On June 20, Bloomberg reported that Daimler had cut its profit expectations, foreseeing that the Chinese will buy fewer vehicles after Beijing introduced new tariffs on US auto imports. The problem is that many of the manufacturer's SUVs are built in the US state of Alabama and then shipped to the US.
On June 15, China and the US slapped high trade tariffs on each other's goods. The EU followed suit. In addition, Canada signaled it will impose duties on C$16.6 billion ($12.5 billion) worth of US exports from July 1.
For its part, Mexico applied additional tariffs on $3 billion worth of US goods in early June, while India notified Washington on June 22 that it will impose higher tariffs on a number of products imported from the US, including agricultural products and industrial inputs, from August 4.
Given the extent of globalization, it appears that there will be no winners in the looming trade war which is engulfing the world, as the International Monetary Fund warned in late May.
"Everybody loses in a protracted trade war, we encourage countries to work constructively together to reduce trade barriers and to resolve trade disagreements without resort to exceptional measures," IMF Director of Communications Gerry Rice stated on May 31.