Tough Tariffs by the European Union and China Cause Pain in Red States

Arthur J. Villasanta – Fourth Estate Contributor

Washington, DC, United States (4E) – The European Union (EU) and China, the United States’ largest trading partners, are targeting their retaliatory tariffs at American states that voted Donald Trump president of this country. And some politicians now propose the EU also target Trump’s properties in retaliation.

The trade war launched by Trump in the name of ignorant economic nationalism is now a world trade war that will likely slow down U.S. economic growth. Cato Institute’s Herbert A Stiefel Center for Trade Policy Studies estimates Trump’s the tariffs might cost the U.S. economy over $100 billion, which is equal to the gains from Trump’s corporate tax cuts enacted into law in December 2017.

In response to punitive U.S. tariffs on its aluminium and steel exports, the EU is going after $3.3 billion in American exports. The EU hit list includes 200 categories, including corn, rice, orange juice, cigarettes, cigars, T-shirts, cosmetics, boats and steel. It also imposed 25% duties on Harley-Davidson motorcycles, Levi’s jeans and bourbon whiskey.

The EU and China’s targeting of products from Republican Red States is beginning to pay off in terms of a brewing battle between Republicans in Congress and the White House, said Dan Ikenson, a director of the Cato Institute.

Key swing states in the mid-term election in November will be affected by a trade war, said Ikenson, who added that all U.S. shoppers will suffer because of Trump’s trade war because tariffs on raw materials will become a tax on costs of production.

“Hopefully, he will be talked off the ledge before the tariffs come into effect on July 6,” said Ikenson.

The Chinese appear more determined to hurt Red States than the EU, however.

“The idea behind China’s strategic retaliation is to remind the president that he needs those states for Republican victories in the fall,” according to Ikenson. “The Chinese are responding in a similar way by picking off the products. They’re looking to increase the cost of production for U.S. industries.” In addition, China is hoping that “just the presentation of their list will be enough to get U.S. industry to convince the administration that it’s going down the wrong path”.

The first wave of Chinese tariffs will hit $34 billion in U.S. exports on July 6, with another $16 billion still to be scheduled. Chinese tariffs will affect a variety of agricultural products, including soybeans, corn and wheat, beef, pork, poultry and automobiles. The second set of tariffs will impact coal, crude oil, gasoline and medical equipment.

Keith Ellison, Deputy Chair of the Democratic National Committee, wants the EU to hit Trump where it hurts him the most — in his wallet. “Dear Europe, if you want to stop Trump, sanction his companies,” tweeted Ellison.

In a recent op-ed in one of the UK’s leading newspapers, Ellison said a more effective approach in dealing with Trump “will be to target Trump’s wallet.”

“There are countless examples of how Trump is blatantly using the presidency to enrich himself,” wrote Ellison. “His controversial tax reform will reportedly save him and his family hundreds of millions of dollars. His son-in-law’s family openly uses their connection to Trump as a selling point to entice investors in China.

“His state department has publicly promoted Trump-owned private clubs. Foreign embassies have concluded that if they want access to Trump they should stay at his hotel in Washington. Curiously, Ivanka Trump secured seven trademarks in China around the same time Trump eased fines on a major Chinese telecommunications company.

“Most recently, Trump directed the commerce department to resolve its issues with sanctioned Chinese telecommunications company ZTE just two days after China floated a $500m loan to developers working on a Trump project.”

Ellision, however, noted that sanctions targeting Trump’s own companies and wealth “will sting in a way that he cannot ignore.”

“And that is exactly what Europe should do: don’t sanction or impose tariffs on Minnesotan companies that share no responsibility for Trump’s policies. Sanction Trump’s own companies and bar them from the EU market.

“For example, the EU and member states could prohibit officials from staying or holding events at Trump properties, or block the use of European money in financing Trump business and development deals. Just moving ahead on the planned placement of windmills near his Scottish golf course might be more likely to get Trump’s attention than a tax on motorcycles.

Ellison said targeting Trump’s companies “is a more moral strategy” that “will deprive Trump of any rally-round-the-flag-effect that broad sanctions tend to generate. In fact, if he tries to escalate, Americans would see that Trump is risking the broader US economy just to protect his own wealth.”

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