Good morning,
EU officials are breathing a sigh of relief after Donald Trump blinked first in his tariff war. The US president’s decision to suspend tariffs for 90 days and then to exempt smartphones and computers in a major concession to China, suggests that Trump does not think ‘tariff’ is such a beautiful word as he did a few weeks ago.
But it would be a mistake to assume that the economic turbulence of the early months of the Trump 2.0 era is over.
With the US no longer a reliable partner in the short-term, the EU Commission says that it will diversify its trade relations, striking a series of trade deals with new or existing partners. It has set a December deadline to complete a trade deal with India and announced the launch of talks with the United Arab Emirates last week.
The trouble is that the EU is not designed to move quickly, no more so than with trade policy. Besides, 27 sets of national economic interests make ambitious trade deals the exception rather than the rule for the EU.
Agreeing a trade deal with the six South American states in Mercosur took over a decade. And remember, the Mercosur pact hasn’t even started its ratification process, which could be far harder than negotiating it in the first place. India, for example, would demand exemptions from the EU’s carbon border levy which will otherwise hurt its steel industry. The commission says that it wants to expand the scope of the carbon tax.
It’s not just the EU that moves slowly on trade. One of the great Brexiteer myths was that, freed from the EU’s shackles, ‘Global Britain’ would immediately broker its own trade deals with the rest of the world. It didn’t happen. That is because while anyone can impose tariffs on another country, negotiating trade deals is a highly technical and very slow process.
- Benjamin Fox, Africa editor
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Agenda
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