Washington/Brussels: Economists caution against the global economy being under threat due to the US-China trade war. Considering the situation a new trade war between the United States and Europe is most likely to spark off. If the trade dispute festers between the United States and Europe, which hold a bilateral trade worth $1.1 trillion, it could have a disastrous effect on the global economy. Given the scenario, Europe has threatened the US to impose tariffs on products worth 19 billion euros. The reaction emerged from Europe in retaliation to US President Donald Trump’s threat of imposing tariffs worth $11 billion on European goods.
A significant dispute has triggered between the United States and Europe over the World Trade Organisation (WTO) financial aid to the big multinational organisations. In one of the cases, the WTO had ruled in favour of the United States. The United States had then decided to take action against Europe based on the WTO ruling. Also, referring to the judgement President Trump had warned the EU, saying that ‘the EU has taken advantage of the US on trade for many years. It will stop soon’.
The EU had raised strong objections over the tariffs saying that the United States tariff proposals were ‘totally unjustified’. However, the United States ignored the objections calling the decision appropriate. The European Union, therefore, also warned of imposing tariffs on the US goods, bringing up the issue of the complaint at the WTO.
An EU diplomat clarified that the United States tariffs were unreasonably hiked after the WTO judgement, and if the US inflated their list, EU would also do the same. The diplomat said that the European countries had suffered losses due to the subsidies it provided to the planemaker Boeing, and the bloc had decided to slap 19 billion euros of fresh tariffs on the US goods. Additionally, the related list of items brought under the ambit of tariffs has been circulated to the member countries, and it will be announced in the next week, the EU stated.
Since the last two years, the trade war is raging between the United States and the European Union, and President Trump has accused the bloc of taking undue advantage of it. Last year, President Trump had imposed tariffs on steel and other goods, imported from the EU. After that, President Trump had threatened to impose tariffs of 20 to 25% on the cars imported from Europe. Although negotiations were initiated regarding the trade issues between the United States and the European Union, the final decision had not been reached as yet.
Given the background, a trade war seems likely to flare up once again because of the proceedings that ensued the WTO decision. The United States is already involved in a trade war with China. Moreover, if the US-EU trade tensions exacerbated, the global economy might have to bear severe repercussions.