Avoiding an unnecessary EU-US trade war

With a deadline looming, the Trump administration announced on Monday that it would delay a decision on whether to grant the European Union (EU) permanent exemptions to steel and aluminium tariffs by another month, giving more time to negotiate a deal between the United States and the EU.

Monday's announcement came as a relief to economies of the EU, America's biggest trading partner. It followed last week's meetings in Washington between President Donald Trump and French President Emmanuel Macron and German Chancellor Angela Merkel, who warned that the EU could retaliate with its own measures if it did not receive exemption from the metal tariffs. But if a deal will not be reached by June 1, President Trump could still target the Europeans with broad tariffs of 25 per cent on steel and 10 per cent on aluminium.

The irony is that only two years ago, the US and the EU were negotiating a trade accord, the Transatlantic Trade and Investment Partnership (TTIP), that would have removed most of the trade barriers between these two global economic powers, who are also close military allies. Together, the US and the EU, a 28-nation bloc, account for around one-third of world trade.