“When a
country (USA) is losing many billions of dollars on trade with virtually every
country it does business with, trade wars are good, and easy to win.”
President
Trump. Friday March 2, 2018.
Macron and Merkel
came separately to Washington, they saw Trump, Trump conquered. Barring an unlikely Kim
Jong-un like climb down by President Trump, Trump’s trade war on NATO starts
Tuesday. Uncle Scam start reneging on his treaties, starting with Iran no later
than May 12. If either actually happens,
bad things for the global economy will start to happen fast across the summer.
Below, the EUSSR
faces a crisis far bigger than Brexit. Trump’s about to crash Europe’s cars.
EU Sounds Trade-War Alarm as Trump Points Gun `at Our Head'
By Nikos Chrysoloras and Jonathan Stearns
Updated on 28 April 2018, 12:09 GMT+1
The European Union warned about the
costs of a trans-Atlantic trade war while bracing for one to erupt after the
U.S. signaled it will reject the bloc’s demand for an unconditional waiver from
metals-import tariffs.“A trade war is a losing game for everybody,” Belgian Finance Minister Johan Van Overtveldt told reporters in Sofia. “We should stay cool when we’re thinking about reactions but the basic point is that nobody wins in a trade war so we try to avoid it at all costs.”
Donald Trump’s administration is asking Europe, Canada and other allies to accept quotas in exchange for an exemption from steel and aluminum tariffs that kick in May 1, when a temporary waiver expires. “We are asking of everyone: quotas if not tariffs,” Commerce Secretary Wilbur Ross said on Friday.
This puts the EU in the difficult position of either succumbing to U.S. demands that could breach international commerce rules or face punitive tariffs. Forcing governments to limit shipments of goods violates World Trade Organization rules, which prohibit so-called voluntary export restraints. The demand is also contrary to the entire trade philosophy of the 28-nation bloc, which is founded on the principle of the free movement of goods.
The White House last month temporarily shielded some trading partners including the EU from the duties, at 25 percent for imported steel and 10 percent for aluminum on the grounds of protecting national security. U.S. Trade Representative Robert Lighthizer is negotiating with countries seeking permanent exemptions. So far, South Korea is the only nation to be spared from the duties, after reaching a deal to revise its bilateral free-trade agreement with the U.S.
While WTO rules foresee the possibility of countries taking emergency “safeguard” measures involving import quotas for specific goods, such steps are rare, must be temporary and can be legally challenged. The EU is demanding a permanent, unconditional waiver from the U.S. tariffs.
Trump’s demands to curb steel and aluminum exports to 90 percent of the level of the previous two years are unacceptable, an EU government official said. The official, who asked not to be named as talks are ongoing, signaled the EU’s response would depend on the level of the quotas after which the punitive tariffs would kick in.
More
Trump Shows Merkel and Macron That Europe's Clout Is Dwindling
By Patrick Donahue and Justin Sink
Updated on 28 April 2018, 05:01 GMT+1
Europe’s preeminent leaders gave it their best shot this week. All signs are
it didn’t work.France’s Emmanuel Macron and Germany’s Angela Merkel made their separate ways to Washington with a joint mission: to persuade President Donald Trump to stay in the Iran nuclear accord and grant the European Union a reprieve from U.S. tariffs on steel and aluminum.
Instead, Macron ended up improvising a new Iran initiative, and Merkel left the White House saying the decision on preventing a trade war was out of her hands. “The president will decide, that’s clear,” Merkel told reporters alongside Trump at the White House on Friday.
It was widely predicted that neither Macron’s personal rapport with Trump nor Merkel’s more businesslike approach would sway him on policy -- after all, the American president’s positions on both Iran and trade are popular with his political base. But the combined failure of the French president and the German chancellor underscored how little influence they have with Trump.
The meetings laid bare the chasm across the Atlantic since Trump took office. Merkel was queried about her declaration last year in a Munich beer tent that reliable partnerships forged after World War II were “to some extent over.” She signaled that the close relationship with the U.S. was changing.
“Germany and
Europe will take more of its destiny into its own hands, because it’s no longer
the Cold War era,” she said on Friday.
The German
leader’s two-hour working lunch at the White House on Friday began with a
cordial exchange; Trump lauded Merkel as an “extraordinary woman.” It was a
contrast to her first awkward trip to Trump’s Oval Office in March 2017, when
the president appeared to avoid shaking her hand.
But the
meeting was overshadowed by fading hopes that Merkel would be able to move the
U.S. president on trade and the Iranian nuclear accord.
More
In a trade war Germany is the weakest link
Steel tariffs are a side show — extra duty on car exports
could devastate the EU
Whether trade wars are easy to win, as US President Donald Trump asserts, depends a great deal on your opponent. If your target is Germany — a country with a current account surplus of some 8 per cent of gross domestic product — then yes, a trade war is easy to win.
For
the US to target Germany is in some respects a category error. As a member of
the EU, Germany does not have an independent trade policy. As a member of the
eurozone, it does not have a national currency. The right geographical counterpart
to the US would be either the EU or the eurozone: the first if your grievance
is trade policy, the second if it is the currency. But in the end, this
distinction does not matter. The eurozone ran a current account surplus of 3.5
per cent of GDP in 2017 — which is huge given the size of the economy.
The
eurozone’s anti-crisis strategy since 2012 has been short-sighted, pushing the
current account into a strong surplus and expecting the world to absorb it. It
was a beggar-thy-neighbour strategy, more appropriate for small countries than
the world’s second-largest economy. The reason why such a strategy is
unsustainable is now becoming clear. It makes you vulnerable to protectionist
action, such as the 25 per cent tariffs on steel and the 10 per cent tariffs on
aluminium imposed by the US. These are due to take effect on Friday, barring a
last-minute reprieve.
Germany is a large exporter of steel to the US, but steel is only a side show. The real issue is whether Mr Trump is going to follow up on his repeated threats by slapping tariffs on imported cars. The Brussels-based think-tank Bruegel calculated the effects of a hypothetical 35 per cent tariff hitting the European car industry — it comes up with a revenue loss estimate of €17bn a year. The overall economic impact would be higher because of network effects. The EU is not only hooked on exports but also on producing cars to sell to the world.
More
If all
else fails, immortality can always be assured by spectacular error.
John Kenneth
Galbraith.
The monthly Coppock Indicators finished March.
DJIA: 24,103 +272 Down
10. NASDAQ: 7,063 +300 Down 13.
SP500: 2,641
+202 Down 10.
All
three slow indicators moved down. For some a new bear signal, for others a take
profits and get back to cash signal.
DJIA. Buy:
29/7/16 - 18,432. Sell: 29/3/18 –
24,103.
SP500. Buy: 29/7/16 –
2,174. Sell: 29/3/18 – 2,641.
NASDAQ. Buy:
29/7/16 – 5,762. Sell: 29/3/18 – 7,063
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