Liberal Democrats are so stunned by the news coming out of Germany that the mainstream network media are avoiding covering it. Total media blackout.
On Thursday, German Chancellor Angela Merkel backed down in the brewing “trade war,” indicating she would be willing to renegotiate the excessive tariffs slapped on U.S. automobiles. Half the cars shipped from the European Union are made in Germany, giving her some serious incentive.
“We now have tariffs on aluminum and steel and we have a discussion that is far more serious,” Merkel said in an address to German lawmakers.
“This is taking on the contours of a trade conflict — I don’t want to use words that go any further. It’s worth every effort to try and defuse this so that this conflict does not become a war.”
President Donald Trump’s threat to match their 20 percent tariff with a similar one of our own has Merkel thinking twice about all the BMW’s, Audi’s, Mercedes, and Volkswagens that will start piling up instead of being shipped to America.
As President Trump likes to say, “Trade wars are good and easy to win!”
For decades, the United States has been the seemingly constant victim of one-sided deals, especially when it comes to world trade.
When our goods are sent overseas, added trade taxes called “tariffs” are tacked on to intentionally jack up the price for consumers. The idea is to make local brands more competitive with imports. In the case of our cars exported to Europe, the tax is 20 percent.
On the flip side, there have been very low tariffs added to the things we import. Our biggest imports like steel, cars, oil, and computers have tariffs “at or near their lowest levels ever,” according to Pew Research Center.
Under Barack Obama’s administration, they took the progressive approach, “being nice and hoping other nations will be fair to us in return,” as the American Thinker writes. “That works in kindergarten, where a teacher is present to enforce the triumph of being nice.”
China got away with actually “manipulating” their currency value to tilt the playing field. President Trump managed to convince them to let it return to its honest value without actually admitting they manipulated anything. This way, they were able to “save face.”
Now, steel and other tariffs are headed in China’s direction to continue smoothing out the unfair imbalances Obama let the Chinese get away with.
As soon as President Trump even suggested hitting Europe’s auto exports there was serious blowback. Trump proposed that either Europe drop their tariffs down to our level or we will raise ours to theirs. That’s “no way to treat our allies” he was told.
That argument doesn’t hold water because that is exactly how our “allies” are treating us. America first from now on. With the price of a BMW going up by a fifth, Cadillacs start looking more attractive here at home.
Especially those big gas guzzling SUV ones, now that America is pumping oil again.
President Trump’s rhetoric has been backed up often enough by action since he took office that European auto-makers are paying attention. “Talk and tweets” are already “taking a toll,” Mark Carney with Bank of England notes.
While Merkel gave her approval to rethink their collective strategy, she reminds everyone that she isn’t the final decision maker.
EU tariff negotiations are subject to group approval which requires a “common European position.” She will be throwing her weight around pretty heavily but all the back-room deals haven’t been struck yet. “We are still working on it,” Merkel notes.
The Chancellor told reporters “such a deal would need to be offered to other countries that export cars to the EU, too, if it is to conform with World Trade Organization rules.”
German carmakers sat down Wednesday to discuss the matter with our ambassador, Richard Grenell. There’s already a deal on the table. President Trump offered a zero percent tariff on European cars in exchange for the same rate in return.
Global export orders are down because of the unrest and European manufacturing output has been scaled back in preparation for “uncertain trading.”
In China, the talk is tough but insiders say they aren’t ready to back it up. “China says it’s girded for a trade war with the U.S. and can give as good as it gets, but behind the official bravado lies a deep unease over trade friction with Washington,” Associated Press reports.
One Chinese economist, Yu Zhi, urges Beijing to “fully estimate the negative impact of the trade war on the Chinese economy.” He wants to avoid a trade war at all costs. President Trump added 25 percent to “$34 billion in Chinese products starting Friday.”
The Chinese Communist Party newspaper, Global Times ran an editorial on Thursday with the headline, “Washington cannot contain China’s growth through a trade war.”
We aren’t trying to contain China’s growth, we are trying to improve our own by making our goods trade fairly with their goods. As it stands right now, China gets all the breaks.
A spokesman for the Commerce Ministry, Gao Feng, says Beijing is in wait and see mode but “will not bow in the face of threats and blackmail. China will fight back to defend the core interests of the country and the interests of the people.”
Until they see the light, they will be paying 25 percent more for anything they want from us.