Analysis. The president of the European Commission is ‘not overly optimistic’ about defusing Donald Trump’s antagonism against Europe.

On a trade warpath, Trump cannot be reasoned with

Jean-Claude Juncker—a “brutal killer,” according to Trump—tried Wednesday to bring the US president over to the side of reason, and to prevent the already-declared trade war from dragging the world economy into the abyss and increasing the risk of armed conflict worldwide.

Donald Trump, who welcomed the president of the European Commission at the White House, sees Juncker, in his own words, as the representative of people who “sound nice, but they’re rough.” It’s “unbelievable” what these Europeans are doing, Trump added, citing the $151 billion trade balance surplus that they have with the US.

Juncker is seeking to accomplish a strategy of triangulation: he was in China on July 16, looking for common ground for the defense of multilateralism, and he came to meet Trump on Wednesday proposing a reform of the WTO, in an attempt at rebuilding a united Western front which has many complaints to make against China, starting with the current casus belli of steel and aluminum, which led to the breakout of the trade war (as there is a Chinese production surplus).

Trump hit the EU with higher tariffs and Brussels responded by imposing tariffs on tens of billions of dollars worth of imports from the United States, to which another $20 billion might be added. Pascal Lamy, the former director general of the WTO, has concluded that Trump holds a medieval notion of ​​international trade, taking into account only goods and ignoring services altogether.

As Trump himself admitted, he gets irritated because he sees too many Mercedes in New York and no Chevrolets in Berlin. But he has already had to deal with the first negative consequences of the tariffs: the US has allocated $12 billion in aid for farmers affected by the retaliatory tariffs imposed in reaction to the increase in import duties by the United States, as a compensation for their losses (worth a total of $13 billion according to the farmers, but only $11 billion according to the administration).

Now, auto imports find themselves in Trump’s crosshairs: the tariffs could rise to 25 percent, which he would justify by invoking “national security.” Germany, the country that stands to be most affected, has proposed a reciprocal lowering of tariffs on cars. “I am not overly optimistic,” Juncker said as he arrived in Washington.

The EU is not worrying that much about cars, since its auto exports are not a very significant part of its global trade balance. But the trade war also has other implications. The US has lowered its capital gains tax rate from 39 percent to 21 percent (while the EU average is around 25 percent), so that it is attracting more capital. There is also the problem of the fines levied on each other’s businesses, which are much higher in the United States against European companies that the $5 billion that the EU has just hit Google with.

Many fines against European companies and banks have to do with Iran: it is on this geopolitical front that the tension is highest, and it leads to possible war scenarios. Many European companies are withdrawing from Iran and abandoning their investment projects. Trump has also begun hostilities on the monetary front, accusing the Europeans—as well as “others”—of manipulating their currencies by devaluing them in relation to the dollar, and has struck back through the Federal Reserve, which has raised interest rates (even though the IMF says it has not seen evidence of any such “manipulation”).

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