Only a week after finalizing a partial trade deal with China and watching a revised North American trade pact garner bipartisan support as it passed through the Senate, President Donald Trump set his sights on the European Union as the next frontier for commerce renegotiation – and possible tariff implementation.
In a wide-ranging interview with CNBC at the World Economic Forum’s annual gathering in Davos, Switzerland, Trump on Wednesday said the European Union has been “very, very tough to deal with” in terms of trade. Reflecting on his Tuesday meeting with new European Commission President Ursula von der Leyen, Trump said he hopes to soon begin a formal renegotiation of America’s trade relationship with Europe.
“I said, ‘Look, if we don’t get something, I’m going to have to take action. And the action will be very high tariffs on their cars and other things that come into our country,'” Trump said. “They’re going to make a deal, because they have to. They have to. They have no choice.”
Political Cartoons on Tariffs and Trade
Trump’s administration has for months teased tariffs on European automotives and other exports – threats that have ramped up as a handful of European countries consider implementing a digital tax that would impact U.S. businesses operating abroad. Following a series of public threats from – and private discussions with – the White House, France announced plans to delay tax implementation, buying more time to work out the policy’s details.
Treasury Secretary Steven Mnuchin, meanwhile, told The Wall Street Journal this week that the U.K. and Italy will “find themselves faced with President Trump’s tariffs” if they go through with implementation.
Following her meeting with Trump, von der Leyen said she was “convinced that we can engage in a positive U.S.-EU agenda in trade, as well as on technology, energy and much more besides,” according to the Belgium-based media outlet Euractiv. But details remain scarce to this point as to what, exactly, both sides would want out of a trade renegotiation. Trump has repeatedly hinted that addressing bilateral trade deficits with European countries is among his main priorities.
“We’ve had a tremendous deficit for many, many years,” Trump said Wednesday morning. “I wanted to do China first. I wanted to do Mexico and Canada first. But now that we’re all done – and now what we do is we are going to do Europe.”
Trump said he is confident his administration will be able to work out some sort of future agreement, to the point that he said he would be “very surprised if I had to implement the tariffs.” But he and Mnuchin dangled the tariffs as a threat and championed their effectiveness in dealing with China this week at a conference that has historically revolved around global coordination and cooperation.
Trump’s comments on Wednesday follow the administration’s recent decision to withhold from Congress the results of a Section 232 investigation specifically related to certain automotive imports. Trump administration officials say releasing the results of the report would undermine Trump’s ability to negotiate. But withholding the results of the investigation defies a congressional provision added to a spending bill that was passed last year. The decision also precludes lawmakers and members of the public from confirming that tariffs are indeed justifiable on European automotives.
“By refusing to make public the statutorily-required report on automobile tariffs, the Department of Commerce is willfully violating federal law,” Sen. Pat Toomey, Pennsylvania Republican, said in a statement Tuesday. “This is unacceptable, and my staff and I are evaluating the potential for corrective action to compel the rightful release of this report.”
Trump on Wednesday also said he is considering pushing for additional tax cuts, despite the federal government running a deficit north of $1 trillion last year. Mnuchin in Davos this week suggested he still believes the administration’s 2017 tax cuts will pay for themselves, though The Washington Post obtained an audio clip of Trump asking campaign donors at a private event last week: “Who the hell cares about the budget?”
The president also lashed out at Federal Reserve Chairman Jerome Powell during his interview with CNBC, saying annual economic growth would be north of 4% – and the Dow Jones industrial average would be as much as 10,000 points higher – if the Fed had not raised rates as high as they did and instead lowered them, possibly to negative interest levels that some international central banks have adopted to keep their economies afloat.
“You look at other countries where they actually have negative interest rates – negative in a positive way,” Trump said Wednesday. “If you lower the interest rates, so many good things would happen.”