In many statements by the trump administration over trade deals, the President and his aides have had a lot to say about using tariffs. Specifically, they have said that they want to a more reciprocal policy with other countries. In all of his statements about trade, President Trump has said that other countries are not being fair to the United States. In a Bloomberg article titled: "Trump's reciprocal tariffs don't add up", Trump's chief economic adviser Gary Cohn is described as using the term "reciprocal" when speaking with European leaders in Brussels when referring to Chancellor Angela Merkel as he was specifically speaking on behalf of the U.S.
trading with Germany. In his statement, he said that if the Europeans have a 30 percent tariff than the U.S. wants one too.
Europe's trade negotiations
The argument made by the Bloomberg writers is that the Trump administration "would throw decades of international commerce on its head" by their policy to have the hold the same tariff percentage over the heads of countries that hold a percentage over the United State. The Bloomberg article further opined saying that the Trump White House would approach their trading policy incorrectly without looking at what the simple problem is. In this case, negotiations made between the two governments.For instance, the article points out that Europe does not charge Mexico an import tax due to a Free Trade Agreement they have with each other.
The article adds that the U.S. doesn't have this kind of agreement with Europe, so, if a car is assembled in the U.S. and sent to Europe, the U.S. is charged a tariff. The example used is for the European Union (EU) to charge a 10 percent tariff on those cars. This would mean that if the U.S. wants to enforce a reciprocal amount in Europe, the U.S.
would have to be ready to fluctuate if and when the EU lower their percentage. The Bloomberg article set this example to 2.5 percent.
'America first' can't compete
Like Mexico, the European Union (EU) also has free trade deals with other countries such as South Korea. So, automobiles that are assembled there are also not charged a tariff to import their vehicles and sell them in Europe and so U.S.
automakers would have to compete with their agreement in order to even be competitive in Europe's auto market. So, the U.S. would also have to expect that the EU would lower their tariff to zero for them, hence, establishing a similar free trade agreement. Currently, the United States has this kind of deal with Mexico under the North American Free Trade Agreement which President Trump has already threatened to cancel. Trump has already targeted Canada for their trade practices with lumber.
As President, Donald Trump has already targeted Germany's BMW's with a tariff threat. In an article by Politico titled: "Trump's right about Germany", President Trump's NATO Summit visit is mentioned where it's also pointed out that the administration was looking in the wrong direction by targeting Germany.
Specifically, because the tariffs aren't necessarily dictated by them so much as they're set by the EU. And though Trump has been wrong about history, facts and a countless number of other issues; one might wonder why those representing the administration would call out Germany in front of other nations not knowing this? In this case, it's suggested that at the very least -- according to some views -- that it was about time that someone called out Germany as they had been holding Europe down and global economic growth with their trade practices.
