Carnegie Europe Director Rosa Balfour said that the European Union can respond to the trade war and has been preparing the toolbox for several months
Carnegie Europe Director Rosa Balfour said that the European Union has the tools to respond to the trade war and has been preparing the tool box for several months. She said that Europe could reach out to other nations if there was a trade war between the US and China.
During the panel discussion “Tariffied World: T minus” at the Global Tech Summit on Saturday, Balfour said that Europe is accelerating talks with India and has also started talks with several nations, including Asia, Malaysia, the Philippines, and the UAE. She stated that Europe is making a lot of effort to find other sources of trade agreements.
On how she sees Europe reacting to tariffs imposed by the US, Balfour said, “With a certain amounts of composure, I would say I think Europeans have stopped divining what the strategy actually is, and had they had they had Trump placed this in the context of the US-China rivalry, it would it would have imposed stark choices on Europeans, but because it’s been conducted in a way where the rationality is not clear. Europeans have really had to focus on, you know, finding an agreement, and in the end, there was an agreement. The EU has quite a toolbox. I mean, the transatlantic economy is worth USD 9.5 trillion and 16 million jobs. So, it’s a two-way thing.”
“The EU does have the tools to respond to a trade war. They have been preparing the toolbox for several months. But, there were..voices about hard to hit back and therefore the net results was composure in the face of the tariffs, which gave the EU the time for Trump to step back without facing the ire as the Chinese did. There was an interview with the President of the Commissioner Ursula von der Leyen, where she said We can do this, we can do that, we have several tools. In the meantime, we are going to start reaching out to our partners, and that’s what we have seen in India.
Europe can start reaching out to other countries. It has 72 free trade agreements around the world. It is now accelerating talks with India, and it is also starting talks with a number of other countries in Asia, Malaysia, the Philippines, and the UAE. Just yesterday, there was a phone call. So, there’s lots of activity to try and hold back and find other sources of trade agreements,” she added.
During the panel discussion, Evan A. Feigenbaum, Vice President for Studies at Carnegie Endowment for International Peace, said that it is not a trade war between the US and China but a war between US President Donald Trump’s policies and the markets. He said that the Trump administration has articulated four rationales for its actions and termed the first three contradictory.
When asked whether it is a US-China trade war, he said, “Not really, because the real war now is between President Trump’s policies and the markets, that’s the real world because what we’ve seen over the last several days is this broad liquidation by a lot of market participants of US assets, anything branded USA equities, bond yields, blowing out the dollar, and even things that are not risk assets or trading as if they are risking that’s situation. That’s a very different situation I think than just saying that this is some kind of trade war between US and China. And what’s more, between US insurance and tariffs aren’t that relevant anymore because when you’re at 145 per cent, on one side, 125 per cent, on the other side basically what you have is a two way trading partner. And that’s essentially what we have. The administration has articulated not one, not two, and not three but four at least rationales for what they are doing. The first three are contradictory, and the fourth is new. The China one is basically gaslighting, and we shouldn’t let the treasury secretary gaslight on this.”
Elaborating on the rationale presented by the Trump administration, he stated, “The first rationale was all about raising revenue in which case, you need high tariffs but not so high that trade seizes because then it cannot collect any revenue. The second rationale is all its resuring, but then you need trade prohibitive tariffs contradictory to the first objective. The third thing we heard was that this is actually about cutting deals. And if it’s about cutting deals, then you need to be prepared to actually roll the tariffs back, to take the tariffs off, which, by the way, they’ve not done, because they’ve left the universal 10 per cent and on top of that, you still have the sectoral tariffs in place….So, now we have this new rationale it is all about China, and I’m sorry it’s gaslighting, because if it had been about China, they would have gone about this differently from the get-go. They would never have tariffed allies in the way they had.”
