As U.S. President Donald Trump and his Chinese counterpart Xi Jinping work out the details of a trade agreement involving agriculture and autos, European policy makers are concerned that a new commercial accord could damage the European Union.
We’re trying to find out “whether trade flows are politically steered in a way that is to the detriment of the EU,” Jyrki Katainen, the European Commission vice-president in charge of jobs, growth and investment, said in Helsinki on Wednesday. “We don’t want to be collateral damage in a political game.”
Earlier this week, the White House said that China had agreed to start buying some U.S. products “immediately” as part of an effort to reach a deal that would avoid escalation of trade tensions. Since April, the U.S. has announced three rounds of tariffs on as much as $250 billion of imports from China. Bloomberg reported on Wednesday that Beijing was preparing to restart imports of U.S. soybeans and liquefied natural gas.
U.S. tariffs on Chinese steel have already translated into supply-chain disruptions and the sale of metals in Europe at below-market prices, Katainen said. “Should this development continue, it’s like going back to clearing trade with the Soviet Union,” he said.
Wariness also came from Germany, Europe’s largest economy. Scaled up purchases for U.S. goods may absorb Chinese-EU trade, according to Volker Treier, deputy managing director of Germany’s Association of Chambers of Commerce and Industry. And yet a trade war between the U.S. and China is also disruptive, he said.
“Our specific concern regarding a China-U.S. deal is that it could be at the expense of market opportunities for European companies,” Treier wrote in an emailed response to a query. “On the other hand, no deal could mean an unfavorable ongoing of the trade conflict between China and the U.S.”
“So we have the choose between the devil and the deep blue sea,” Treier said.
Trump said Wednesday that China is sending “very strong signals” following weekend trade discussions at the Group of 20 summit in Argentina. The Chinese Commerce Ministry said Beijing will quickly implement specific items and move forward on trade talks in the designated 90-day time window.
“Where we are in trade policy next week is impossible to estimate,” said Katainen, a former Finnish prime minister. “That’s why I monitor Twitter, to keep some kind of a handle on the global economy. This uncertainty is chilling.”