The trade war: USA & Europe

Today there are many conversations about the complication of the relations between the Trump’s administration and Europe.
I remind you that on March 9 the head of the White House signed a decree to introduce 25-percent tariffs on steel imports and 10-percent tariffs on aluminum imports. The exemptions were for Canada and Mexico, Washington’s partners in the North American Free Trade Agreement (NAFTA). I note that Trump’s decision to impose duties served as an impetus for the beginning of the trade war.
The Section 232 of US trade legislation allows introduce measures against imports that threaten national security. This step was explained by the high dependence on foreign metals and the reduction of domestic production and capacity. US Secretary of Commerce, Wilbur Ross, said that many steel and aluminum plants has been closed, 75,000 jobs have been lost since 1998.
The US actions became very painful for the European Union, Brussels reacted to Washington’s plans immediately. The head of the European Commission, Jean-Claude Juncker, said that if the US did not abandon its intentions, then the EU would follow the reciprocal duties on steel, bourbon, jeans and peanut butter.
It is not yet clear how this ends and until what time they will exchange duties and tariff charges, but the consequences of the trade war can be extremely destructive. If the US withdraws from NAFTA and announces new import tariffs from China, South Korea and Taiwan, the growth of global GDP will slow to 2.5% in 2018 instead of the basic 3.2%.
However, the US president believes that the US will win the trade war. For the USA, the EU is the main economic partner, it is not even among the three major US importers (China, Mexico and Canada). But for the European Union, the USA is one of the main trade partners for exports and imports. In addition, America is one of the most important markets for the EU. And if we allow America to continue to limit this market with impunity in the future, for Europeans this may end by an economic crisis.
The outcome of the confrontation, in fact, is not so obvious. The history of such trade wars shows that a country that initially has stronger positions may eventually lose out. But I think that in this trade war, caused by mutual tariff increases, no one will win. After all, you can notice that it will not just a conflict of interests between the two countries, but a clash of protectionists and globalists, which lasts for a number of years…