Wednesday’s meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker was fruitful—the two sides agreed not to levy new tariffs on one another for now.
The U.S. and EU will “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods [and] work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans,” Trump and Juncker said in a joint statement.
So far, the U.S. hit the EU with tariffs on steel and aluminum imports, and the EU reciprocated with duties on $3.2 billion of U.S. products. Trump has recently been talking up the possibility of slapping new tariffs on European cars, and the EU was reportedly mulling levies on $300 billion of U.S. imports in response, so the apparently-averted escalation of the trade conflict would have been quite severe.
Juncker then went off to a thinktank event where he seemed to declare victory in the talks. “The major progress today is that our American friends agreed not to increase tariffs on cars and other products during the negotiation, which is a major concession by the Americans I have to say,” he said, as reported by Politico.
On the other hand, Trump’s tactic of setting low expectations ahead of the talks seems to have paid off.
Under the agreement, the EU will buy more liquefied natural gas from the U.S.—”they’re going to be a very, very big buyer,” as Trump put it, talking up the potential of such sales to diversify Europe’s energy supply.
Juncker noted that the EU’s proposed construction of more terminals for importing U.S. gas “is also a message for others”—presumably for Russia, which is planning a new pipeline called Nord Stream 2 for selling gas to Germany, thus annoying the U.S. and much of the rest of Europe.
And then there’s those soybeans. “The European Union is going to start, almost immediately, to buy a lot of soybeans—they’re a tremendous market—buy a lot of soybeans from our farmers in the Midwest, primarily. So I thank you for that, Jean-Claude,” said Trump.
U.S. soybean prices have been a notable casualty of Trump’s trade war with China, which has cancelled many orders in retaliation for American tariffs. As a result, Brazil’s soybean producers have been pumping their wares into the Chinese market, so, with less competition there, it was already likely that U.S. producers would be doing brisk trade in the EU.
Interestingly, Trump also said the EU would join the U.S. in working to reform the World Trade Organization (WTO), which Trump accuses of letting China get away with major intellectual property theft and market-distorting subsidies. If that cooperation pans out, there would be a reduced likelihood of the U.S. pulling out of the WTO, which Trump has reportedly threatened.
All in all, Wednesday’s agreement is light on detail, and it could easily be derailed, but it does at least signal a temporary rapprochement in EU-U.S. relations that allows both sides to keep their heads held high.