Tariff Game to Be Played?

For a number of days, there's been hyped news in Germany and a lot of political commentary over the tariff business with President Trump.  There's a high-level German minister in DC this week to chat over the topic and I anticipate four things occurring out of this 'mess'.

1.  Once it starts, the counter-reaction will occur, and various tariffs will occur.  It's not a trade embargo....it's simply tariff attached which pumps up the cost factor.  So it's likely when I walk into my local grocery (REAL, pronounced RE-al) and see pop-tarts up there for some outrageous amount of 4.9 Euro (in reality $5.9) BEFORE the whole tariff deal.....it'll now likely go to 5.40 ($6.4)....for a box of four sets of pop-tarts.   People will still buy it, because it's the only product like that.  Regular Germans don't eat them....so it'll be a special treat situation.

2.  Germans will find their specialized steel still being imported into the US for the time-being....but six to twelve months down the line.....some US steel-makers will arrive and say they can make the same type steel product.....for 25-percent less.  At that point, import of German steel will start to decrease.  For 90 days, I see nothing really changing attitudes.  It's one year out that you need to worry about things.

3.  The Germans want this resolved, and they are going to find Trump standing there and asking where their EU representative is....because he doesn't want to talk to anyone without any real power.  At that point (probably even with Pete Altmaier visiting this week)....the new reality will occur that Germany can't repair their trade issue here, without EU work or participation. 

4.  All of this.....leads onto one single topic....a new TTIP.  Yep, and if you go back to the fall of 2016 and remember how it failed with the Obama Administration and the EU team.....well, you have to wonder how the Germans feel now.

For the EU?  The non-German folks can drag this out and really make Germany stressed.

In the first month or two of the Trump administration....there was this face-to-face meeting between Merkel and Trump.  Trump wanted to talk trade.....Merkel gave the push-back and said that that the EU handles all trade talk....so, no deal. 

In this case, I think Trump is posed for a long-term deal, and will refuse to engage with any German on trade.....telling them that only the EU can handle their trade issues, and they'd best go get them enthusiastic.  The Germans will then realize that nationally....they don't run their trade business anymore, and this is something they'd never really thought about.

Somewhere in the middle of 2019....I expect Team-Trump and the EU trade folks will sit down and try to rebuild TTIP.  The Germans will be amazed at the lack of willingness on the EU side and some jobs will be lost by that point in this little tariff 'war'.