“Secretary of Commerce Wilbur Ross will be speaking with representatives of the European Union about eliminating the large Tariffs and Barriers they use against the U.S.A.,” Trump tweeted on Monday. “Not fair to our farmers and manufacturers.”

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No Progress

Trump's rhetoric drew unanimous condemnation from European finance ministers gathering in Brussels. France's Bruno Le Maire said that he's concerned about “a trade war between the EU and the U.S.” while his Spanish counterpart Roman Escolano, making his debut as minister, said protectionism is always a mistake.

Malmstrom accused the Trump administration of using trade “to threaten and intimidate” Europeans and using the issue as a “scapegoat.”

A meeting in Brussels between Malmstrom and her U.S. counterpart Robert Lighthizer on Saturday ended without a breakthrough, as the EU didn't receive assurances that it will be exempted from the metal tariffs. “If anyone starts throwing stones, it's better first to make sure he's not living in a glass house,” European Commission spokesman Enrico Brivio said.

The bloc says that it's a close ally of the U.S. and therefore any import levies on national security grounds are unjustified. While no further bilateral meetings are planned at the moment, contacts are ongoing as the EU is racing against time to secure an exemption before the aluminum and steel tariffs are enacted in less than two weeks.

Asked to respond to Trump's accusations that the EU is imposing barriers to U.S. automakers, Malmstrom said that “it's hard to argue on Twitter over these issues, but the European Union is a very open market.” The bloc does impose a 10 percent levy on U.S. car imports, but the U.S. charges a 25 percent levy on trucks and pickups, and up to 40 percent on some clothes, she said.

On average, the EU applies a 3 percent tariff on U.S. products, while the average tariff applied by the U.S. is 2.4 percent, the European Commission said, adding that isolating cars is “cherry-picking.” The U.S. currently applies a 2.5 percent tariff on European car imports.

“We want free and open world trade because for consumers and for citizens this is the best situation,” acting German Finance Minister Peter Altmaier said. “That's why we—if possible—want to avoid a trade war.”

What Bloomberg Economists Say

What happens to global growth if there's a trade war? Based on Bloomberg Economics' estimates, if the U.S. raises import costs by 10 percent and the rest of the world retaliates, raising tariffs on U.S. exports, the cost by 2020 would be 0.5 percent of global GDP.

To put that into perspective, that's about $470 billion—roughly the size of Thailand's output.

—Jamie Murray and Tom Orlik, Bloomberg Economics

From: Bloomberg

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