Tariff Wars: EU goes on war footing in response to Trumps declaration "that trade wars are good and easy to win" - by RM

"The reincarnation of US Voodoo Economics"

First a look at the "big picture"  of trade between the EU and the US, which Mr. Trump is now ready to undermine with his recent nonsensical "tariffs" statement.

• Total US investment in the EU is three times higher than in all of Asia.
• EU investment in the US is around eight times the amount of EU investment in India and China together.
• EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.
• The transatlantic relationship also defines the shape of the global economy as a whole. Either the EU or the US is the largest trade and investment partner for almost all other countries in the global economy.
• The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.

 The EU response to the Trump Tarrifs announcement was swift and surgical .

The European Union’s top trade official mentioned cranberries, orange juice and peanut butter as possible targets Wednesday as the E.U. prepares to strike back if President Trump follows through with tariffs on imports of steel and aluminum.

European officials are also preparing to target $3.5 billion in American goods through a 25 percent "tit-for-tat" levy across consumer, agricultural and steel imports, Bloomberg reported, citing a list compiled by the European Commission.
 
This came after EC President Jean-Claude Junker on Friday mentioned targeted products like Harley-Davidson (HOG) motorcycles, Levi's jeans and bourbon if the U.S. tariffs are implemented. Canada President Justin Trudeau called Mr. Trump Monday evening to register his "serious concer".

"Retaliation against US  by trading partners is likely," Goldman Sachs (GS) economists wrote in a note. "In the past, retaliatory tariffs have focused on the product in dispute (in this case steel and/or aluminum), consumer goods with a particular focus on luxury items and agriculture. We expect a similar pattern this time."

While retaliation is likely to come in  tariff form, "more subtle changes to tax and regulatory policies targeting U.S. companies could also follow," the economists wrote.

Ford (F) and GM (GM) could feel a pinch of about $1 billion each, or 12 percent and 7 percent of each company's respective operating income for 2017, if the 25 percent steel tariff is implemented and prices rise at a similar rate, Goldman Sachs analysts estimated in a recentseparate report.

U.S.-based machinery companies would get squeezed as costs increase. Well-known brands with good distribution, like Deere (DE) and Caterpillar (CAT) might do better than Terex (TEX) and Oshkosh (OSK), Goldman said. Oshkosh is based in House Speaker Paul Ryan's home state of Wisconsin. 

 E.U. Trade Commissioner Cecilia Malmstrom also took aim at Trump’s assertion that U.S. national security justified plans to impose tariffs of 25 percent on steel and 10 percent on aluminum.

The U.S. measures “would mainly impact traditional allies of the United States,” she said.

E.U. officials had previously flagged Kentucky bourbon, Harley-Davidson motorcycles and Levi’s jeans among the products they have in their sights for retaliatory tariffs. A draft of European countermeasures published by Bloomberg News targets $3.5 billion in annual imports from the United States, including $1.1 billion in U.S. steel products, along with clothing, makeup, motorcycles, boats, corn, rice, beans and other agricultural products.

E.U. countries exported $6.2 billion worth of steel to the United States in 2016, according to E.U. figures. The E.U. is the top trading partner of the United States in goods, and it is the top U.S. export market.The European Union’s top trade official mentioned cranberries, orange juice and peanut butter as possible targets Wednesday as the E.U. prepares to strike back if President Trump follows through with tariffs on imports of steel and aluminum.

Note EU-Digest  2017 :  See list below of U.S. trade in goods with European Union
 
Please note that: All figures are in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified. Details may not equal totals due to rounding. Table reflects only those months for which there was trade.

Month	Exports	Imports	Balance
January 2017	21,290.3	32,828.8	-11,538.5
February 2017	22,994.8	32,386.5	-9,391.7
March 2017	25,691.5	36,881.1	-11,189.6
April 2017	22,960.2	35,498.7	-12,538.5
May 2017	23,732.0	36,488.1	-12,756.1
June 2017	23,768.1	36,237.8	-12,469.7
July 2017	21,438.3	34,892.7	-13,454.5
August 2017	23,383.6	35,772.4	-12,388.8
September 2017	24,277.9	35,702.6	-11,424.7
October 2017	25,689.3	39,411.6	-13,722.3
November 2017	23,528.5	38,256.8	-14,728.3
December 2017	24,762.9	40,575.7	-15,812.8
TOTAL 2017	283,517.4	434,933.1	-151,415.6

Given the low average tariffs (under 3%), the key to unlocking this potential lies in the tackling of non-tariff barriers. These consist mainly of customs procedures and behind the border regulatory restrictions
.
The non-tariff barriers come from diverging regulatory systems (standards definitions notably), but also other non-tariff measures, such as those related to certain aspects of security or consumer protection.

The tariffs statement  by President Trump, if he persists to follow through on his threat, could  eventually also turn into a total trade war between the EU and US, and mean the end of the Atlantic Alliance, which has brought stability, peace and prosperity to Europe and the US,  since the end of the second world war. 

It must not be allowed to happen.   

EU-Digest  The above article can be republished only if EU-Digest is referred to as its source

EU-Mexico Trade Relations: Mexico aims for EU free-trade deal by end of February - by Philip Blenkinsop

Mexico reducing its reliance on US

\Mexico believes it can conclude a new free-trade agreement with the European Union before the end of February, a Mexican official close to the talks said on Wednesday.

The EU and Mexico intend to update a trade deal agreed 21 years ago that largely covers industrial goods. They want to add farm products, more services, investment and government procurement, and include provisions on labor standards and environmental protection. 

Mexican negotiators are in Brussels this week, with the two sides due to reconvene next week in Mexico. 

The Mexican official said EU Trade Commissioner Cecilia Malmstrom could come in the week starting Feb. 19 to help push talks to a close and to allow an initial deal to be announced, though only if a deal was within reach. 

For Mexico, a deal with the EU would be part of a strategy to reduce its reliance on the United States, the destination of nearly 80 percent of its exports. That has become more urgent, given U.S. President Donald Trump’s threat to scrap the North American Free Trade Agreement. 

Mexico is one of 11 countries expected to sign an Asia-Pacific trade pact in March after the United States pulled out of an earlier version.

Read more: Mexico aims for EU free-trade deal by end of February

Italian elections: Eurosceptic Italy in race to form majority government - by Stephanie Kirchgaessner and Daniel Boffey

The two populist parties that won major upsets in the Italian election – the Five Star Movement (M5S) and the League (La Liga) – are in a race to be the first to try to form a majority government after the election produced a hung parliament.

The decision will ultimately fall to Italy’s president, Sergio Mattarella, who could take weeks to determine whether the anti-establishment M5S, which took 32.6% of the vote, or a fragile centre-right alliance led by the League’s bombastic Matteo Salvini, with 35.7% of the vote, are better equipped to create a majority government.

As Italy and Europe digested the news on Monday that a majority of Italian voters had supported Eurosceptic candidates in the national election, both sides began jockeying for position, saying each had earned the right to lead. The Italian constitution gives Mattarella the power to give the mandate to any party, regardless of who has won the most votes.

While the former prime minister Silvio Berlusconi had been seen as leading the centre-right coalition, results showed he was beaten by his younger rival on the right, following a campaign in which Salvini emphasised support for radical immigration policies, including mass deportations of immigrants who are in Italy illegally.

Read more: Eurosceptic Italy in race to form majority government | World news | The Guardian

Germany: Social Democrats sign up to new Merkel-led German government - by Thomas Escritt, Michelle Martin

Germany’s Social Democrats (SPD) decisively backed another coalition with Chancellor Angela Merkel’s conservatives on Sunday, clearing the way for a new government in Europe’s largest economy after months of political uncertainty.

Two thirds of the membership voted“yes” to the deal in a ballot — a wider margin than many had expected. That means Merkel could be sworn in for a fourth term as early as the middle of the month, in a repeat of the grand coalition that has governed since 2013.

Read more: Germany Social Democrats sign up to new Merkel-led German government

Italy: Elections: Why the Italian elections are no test for the European Union - by Cas Mudde

This Sunday, more than 30 million Italians will go to the polls to elect a new legislature and, indirectly, a government. It will be the first major European election of 2018, after a somewhat confusing and inconsistent pattern of elections in 2017, and the international media is sparing few cliches.

Almost no journalist can resist making references to Italy’s almost inherent “political instability”, referring to the many “political crises” and national elections and governments the country has had in recent history – even though Italy had one government more and held one election less than the (allegedly stable) Netherlands in the 21st century.

In the runup to the 2018 Italian elections, the international coverage is dominated by stories that present the usual Italian tropes in all possible combinations. As always, Italy is “on the brink” of political chaos or worse. Article after article covers topics such as mafia and immigration, the rise of fascism, the risk of political violence, or the threat of populism to Italian democracy and the European Union. Don’t get me wrong, many stories are factually correct, even if they often overstate the relevance of their topic. 

Read more: Why the Italian elections are no test for the European Union | Cas Mudde | Opinion | The Guardian

3/2/18 Spain-Terrorism: Spain jails another rapper for praising terror groups

A court in Madrid has sentenced Spanish rapper Pablo Hasel to two years in prison for glorifying terrorism and insulting the Spanish royal family. The case has sparked a debate about free speech in Spain.

The Spanish National Court handed rapper Pablo Hasel a two year jail sentence and fined him €24,300 ($30,000) on Friday for praising terror groups, inciting violence and insulting the Spanish Crown and state institutions.

 The ruling said Hasel, whose real name is Pablo Rivadulla, made the offending statements on Twitter and in a song posted to YouTube.

It's the second time in as many weeks that a Spanish court has sent a rapper to prison.

Just a few days ago, the Supreme Court upheld the conviction of a rapper called Valtonyc, who was given a three-and-a-half year jail sentence for glorifying terrorism, insulting the Spanish royals and threatening politicians in his lyrics.

Note EU-Digest: the people who argue  that these sentences in Spain go against Free Speech should have their heads examined. Free Speech is not a free ticket to glorifying terror and murderers.

Read more: Spain jails another rapper for praising terror groups | News | DW | 02.03.2018

US Tariffs Announcement: EU says it will impose trade 'countermeasures' against US goods in retaliation to Donald Trump’s new tariffs - by Jon Stone

The European Union has said it will impose trade “countermeasures” against American goods in retaliation to Donald Trump’s new tariffs on imported steel and aluminium.

European Commission president Jean-Claude Juncker said retaliatory policies would be announced “in the next few days” in order to “rebalance” the trade situation between European and the US following the move by Mr Trump.

The US president said on Thursday he would introduce a 25 per cent import tariff on steel and 10 per cent on aluminium, claiming that the US had been suffering from “unfair trade”.

“We strongly regret this step, which appears to represent a blatant intervention to protect US domestic industry and not to be based on any national security justification. Protectionism cannot be the answer to our common problem in the steel sector,” Mr Juncker said on Thursday evening.

“Instead of providing a solution, this move can only aggravate matters. The EU has been a close security ally of the US for decades.

“We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk. I had the occasion to say that the EU would react adequately and that's what we will do.

“The EU will react firmly and commensurately to defend our interests. The Commission will bring forward in the next few days a proposal for WTO-compatible countermeasures to rebalance the situation.

Europe’s Trade Commissioner Cecilia Malmström said the measures would “have a negative impact on transatlantic relations” and “will raise costs and reduce choice for US consumers of steel and aluminium, including industries that import these commodities”.

She said the EU would raise a dispute at the World Trade Organisation in Geneva over the tariffs “at the earliest opportunity”.

In what appears to be a veiled reference to Chinese steel production, the Commissioner added that “the root cause of problems in these two sectors is global overcapacity caused by non-market based production”.

During his presidential campaign Mr Trump claimed foreign countries were “dumping vast amounts of steel all over the United States, which essentially is killing our steelworkers and steel companies”.

Read more: EU says it will impose trade 'countermeasures' against US goods in retaliation to Donald Trump’s new tariffs | The Independent