Trump Makes Clear EU Won't Escape His Ire Over Trade for Long
(Bloomberg) -- The EU’s Jean-Claude Juncker left Washington in late July with a Rose Garden truce -- a handshake trade agreement he had good reason to believe would spare the continent from President Donald Trump’s wrath.
It didn’t last.
In a Bloomberg interview on Thursday the U.S. president spoke of the European Union as if it’s likely to be his next target. “Almost as bad as China, just smaller,” he declared.
Trump’s remarks cast doubt on the longevity of his agreement with Juncker, intended to stave off a broader trade war between the U.S. and Europe after the president imposed tariffs on imported steel and aluminum earlier this year. The trans-Atlantic dispute has rattled markets and shaken the international order created after World War II.
They also illustrate why Trump is still seen as a fickle dealmaker internationally and raise questions about his ability to ever negotiate with China, or whether a deal with Canada and Mexico to revise Nafta that appears close will endure.
“As is the case with ceasefires, they’re sometimes at risk but they will be upheld,” Juncker told German broadcaster ZDF on Friday, adding that if Trump raises tariffs on car imports, the bloc will once again retaliate.
In the Oval Office interview, Trump likened a weak euro to China’s renminbi, or yuan, a currency he claims is manipulated to disadvantage U.S. companies and undermine his efforts to right global trade imbalances.
“We’re competing against not only, not only the yuan, we’re competing against the euro," he said. “They keep dropping, dropping, dropping.”
Trump chided Germany’s Angela Merkel for energy purchases from rival Russia that undermined the NATO alliance she so often has defended to him.
“I told her I think it’s ridiculous that you have a NATO to protect yourself from a certain country and then you’re paying a fortune to that certain country,” Trump recounted. “I said: ‘What kind of a deal is that?”’
Trump rejected overtures made by the EU just hours before the Bloomberg interview to eliminate trans-Atlantic auto tariffs. He threatened to pull out of the World Trade Organization and thus severely undercut a global trading system that European powers and the U.S. have spent seven decades building.
“I would say the WTO was the single worst trade deal ever made,” he said.
EU officials left Washington after July’s Juncker visit privately confessing that they knew that any deal with America’s current president was vulnerable to his whims.
But, even as he called Juncker the “great Jean-Claude”, Trump in his interview put those whims on full display and punctured hopes of a return to some semblance of normality in economic relations between long-standing economic allies.
EU officials were in Washington just last week discussing how to proceed with the trans-Atlantic deal to reduce tariffs and trade barriers related to industrial goods other than cars that Trump and Juncker announced.
A separate EU mission was also in town last week huddling with U.S. and Japanese officials to discuss how the three economic powers might take on China jointly in the very WTO that Trump lambasted.
The president made clear that for all the recent talk of a trans-Atlantic trade peace it is one that may not last long. A deal would require significant changes not just in the EU’s regulations and standards but in its consumers’ behaviors, and Trump expressed particular skepticism Europeans would alter their buying preferences.
“It’s not good enough” he said of the EU’s auto tariff elimination offer made earlier on. “Their habits, their consumer habits are to buy their cars, not to buy our cars," he said.
The “European Union doesn’t let our agricultural products in,” he went on. “They have a wall,” he complained. “It’s not even a tariff. They have a wall.”
Trump boasted that Europe’s travails - and its weak currencies at times - had helped in his past in business.
“In private life, I always liked a weak dollar and a low interest rate, OK? A strong dollar was only good if I wanted to buy Turnberry in Europe, in Scotland, or if I wanted to buy Aberdeen or if I wanted to buy Doonbeg, Ireland,” he said. “That was the only thing a strong dollar was good for.”
“As president, I feel a little bit differently,” Trump said. “As president, there’s something really nice-sounding about the fact that our dollar is so strong and so powerful. The bad news is that it makes life more difficult when you’re looking to sell product to the rest of the world.”
For Europeans hankering for a return to easier times in the trans-Atlantic relationship, Trump did leave some room for hope.
Asked if he could outlast the Europeans, much as he believes he can outlast the Chinese in his trade battles, Trump said he was certain of victory. But he also made clear he was ready to deal and believed the EU was too.
“They’re dying to make a deal,” he said.
©2018 Bloomberg L.P.