One response to Trump’s tariffs: Striking trade deals without the US
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In just the last two months, the EU has concluded three new trade deals without the US.
PHOTO: AFP
Patricia Cohen
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LONDON - As US President Donald Trump this weekend opened what could become a global trade war, a growing number of countries, including the closest US allies, are forging their own economic partnerships without it. If Washington is putting up a higher fence around its trade, other nations are lowering theirs.
In just the last two months, the European Union (EU) concluded three new trade deals.
The bloc, completing negotiations that started 25 years ago, reached a major agreement with four South American countries in December to create one of the world’s largest trade zones, linking markets with 850 million people.
Two weeks later, the EU struck a deal with Switzerland. Then, in January, the bloc bolstered trade arrangements with Mexico. It also resumed talks, after a 13-year postponement, on a free-trade agreement with Malaysia.
“With Europe, what you see is what you get,” European Commission president Ursula von der Leyen said to the World Economic Forum in Davos, Switzerland. “We play by the rules. Our deals have no hidden strings attached.”
On Feb 1, Mr Trump ordered 25 per cent tariffs on Mexico and Canada – partners in a trade bloc that he signed in his first term – and 10 per cent tariffs on China. By late Feb 3, the tariffs on Mexico and Canada had been delayed by a month, but Europe, Mr Trump promised, was next.
Of course, the US, with the planet’s largest and strongest economy, cannot be ignored. But it can, at least sometimes, be avoided. By punishing long-time allies with tariffs, Mr Trump is encouraging other nations to form trading blocs and networks that exclude the US.
The global economy is increasingly becoming “one that is characterised by ever deepening trade relationships excluding the United States,” said Dr Jacob Kirkegaard, a senior fellow in Brussels at the Peterson Institute for International Economics.
Trump’s latest unilateral and protectionist missives have sped up a reel that had already begun to unspool.
The trend is not necessarily anyone’s preference, Dr Kirkegaard said, but the arrangements offer a “second-best” option given the US rejection of a more open economic order. He added the proliferation of trading blocs, like the one between the EU and South American nations, also helped countries avoid an overreliance on China. NYTIMES
