The United States and the European Union appear to have stepped back from the brink of a trade war, after US President Donald Trump said the Europeans had agreed to work toward lower tariffs and other trade barriers, and to buy billions of dollars of US soybeans and natural gas.
The surprise announcement, made by Trump and European Commission President Jean-Claude Juncker defused, for the moment, a trade battle that began with Trump’s tariffs on steel and aluminum exports and threatened to escalate to automobiles.
European Commission President Jean-Claude Juncker and Donald Trump after they reached “a deal”.
“We’re starting the negotiation right now, but we know very much where it’s going,” Trump said, standing next to Juncker at a hastily scheduled appearance in the White House Rose Garden on Wednesday, US time.
Juncker said, “I had the intention to make a deal today, and we have made a deal today.”
The two sides, he said, agreed to hold off on further tariffs and work toward dropping the existing ones on steel and aluminum, while they tried to work out a deal to eliminate tariffs, non-tariff barriers and subsidies on industrial goods, excluding autos.
It was hard to say, given Trump’s bluster and unpredictable negotiating style, if the agreement was a genuine truce or merely a lull in a conflict that could flare up again. Twice, Trump’s aides have negotiated potential deals with China, only to have him reject them and impose further tariffs. Cutting these trade barriers to zero would be an extraordinarily complex political challenge on both sides of the Atlantic.
And Trump stepped back from punitive tariff threats for some relatively minor European concessions: the purchase of soybeans to make up for a steep fall-off of buying by China, and the promise to purchase liquefied natural gas once the US builds more LNG export terminals.
The gas pledge gives Trump a talking point with Russia, after he vowed to compete for orders in Europe, where Russia is the largest supplier. The lack of natural gas terminals, though, means that this windfall is years in the future.
For weeks, the President has portrayed the EU as fleecing America with unfair trade, but he put away his saber as farm state Republicans were begging for relief.
“I think it’s helpful that they made some progress today with the European Union, and I think we really emphasised that we need to keep the momentum up and get the deals as soon as we can,” said Republican Senator John Hoeven, of North Dakota, who was at the White House for the announcement.