This Tariff Saga Unfolding

While news number one last night on German public TV (ARD), one needs to stand back and review this US-EU tariff situation, and the basic facts.

It is only a proposal.

The import tariff would be 25-percent on steel and 10-percent on aluminum.

If you add up the imports of these items...they currently equal around 40-billion dollars a year.  So the tariff, if enacted....would equal around 10-billion dollars.

Is this a US-EU only tariff situation?  No.....worldwide.  Most business analysts agree, the chief target is China.

The reaction of the EU?  They apparently had a list of products ready to go....very quickly in fact, so it would suggest that they knew for days or weeks that this would come up.  The products in retaliation?  Jack Daniels whisky, Harley Davidson, US-made jeans, certain US vegetables, etc.

The Trump idea was at one sector.....the EU suggestion to counter is a broad sector deal.  In some ways, it's inviting Trump to look beyond steel and aluminum, and go for dozens of other European products.

What happens in a trade war?

Well....this gets to an interesting topic....a trade treaty.

Oh yeah.....that failed TTIP deal?  Yep, the TTIP deal that just simply dissolved in late 2016.  TTIP talks started in 2013 with the EU and the Obama Administration trying to reach a trade deal.  By early 2016, there were various bits and pieces of the deal which were being released off to the public in the EU in order to discourage and dissolve the negotiations. The anti-capitalist crowd and various folks with agendas in the EU....felt it was it was an unfair trade treaty.

What happened when President Trump sat down the first time with Chancellor Merkel and tried to bring up a US-Germany trade treaty?  She grinned and brushed it off....only the EU could handle trade treaties.  She figured that would be enough, and never again would silly trade treaties be discussed.  It's been a year since that little 'grin' episode occurred.   In the German and EU mindset....no trade treat need exist.  Now?  Oh.....well....Trump is more or less pushing them to a table and asking them if they want to start up some kind of chat over trade (hint: TTIP).

German job losses if this tariff were to occur?  Figure a minimum of 50,000 jobs.  Across Europe, even more.

The Jack Daniels whisky tariff?  It was already fairly high-cost whisky, and if you asked most Germans....they'd never tried the stuff in their lives.  Most who have sipped whiskey....could counter the offer with a Scottish whisky.

The US jeans tariff?  There are so many fake brands or cheap brands imported in from China....that I doubt that this is a big deal.

The Harley Davidson tariff?  Well, hardcore bikers flock to the brand, but it was already fairly expensive.  Put another 25-percent tariff on the bike?  It might turn off about half the interest in the bike.  Others will find some way via a non-EU country (like Turkey) to buy it, and then bring it a year later into Germany.

All of this is stacked up in a way to bring people to the TTIP table and wrap up the treaty.  The anti-capitalists will go nuts over the talks, But you can't avoid the EU getting to the table and finally concluding the treaty.  If not, then just admit that, and force each country to write their own trade treaty deal.  That's something that Merkel can't be happy over.

That's it.....it is rather simple when you think over the end-result required.

(Note: for those silly Germans who hype up the idea of intense talks, talking over at least four years, and waiting for the Democratic replacement for Trump.....you actually have a clock ticking away.  Those silly Brits will exit the EU in a year and they might be willing to write up their trade deal....getting the better deal, in a matter of weeks.  Same for Canada....same for China.  You might find by delay tactics, that you simply won't get the better deal, and maybe even get offered a pretty lousy deal).