PARIS: Governments across the world breathed a collective sigh of relief when the US on Wednesday signed a partial trade deal with China, but analysts predict that the pact frees President Donald Trump up for new trade war fronts, notably with the EU and emerging economies.
“This deal may cause short-term relief, but it’s just a stage,” said Sylvain Broyer, European chief economist at Standard and Poor’s, calling it “the tip of the iceberg” of global trade tensions.
“Trade tensions could move on, and Europe could find itself at the centre of the debate,” he said.
EU officials remember only too well the tariffs the World Trade Organisation (WTO) allowed Washington to slap on European products in retaliation for rule-breaking subsidies paid to the Airbus aircraft maker.
Another reminder of Trump’s willingness to weaponise trade came on Thursday when Germany’s defence minister confirmed a report that the US was threatening to impose a 25pc tariff on EU car exports if European governments continued to back the Iran nuclear deal.
“The question is now how the US behaves towards towards Europe,” said Johan Bjerkem, an analyst at the European Policy Centre in Brussels.
The trade deal between China and the United States is “a good thing”, said Evelyn Herrmann, director at BofA Research, “but there are plenty of other things going on that we can’t ignore”.
A visit to Washington by EU trade chief Phil Hogan just as the US and China signed their truce could be seen as an early attempt to head off any coming transatlantic tensions, analysts said.
“Everyone is pleased that we’ve emerged from a logic of escalation, but we don’t yet know what the impact will be,” one EU source said.
Published in Dawn, January 17th, 2020