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Trump is about to target Europe’s farmers

Donald Trump is furious at the EU’s protectionist stance on its agricultural sector. As he attempts to woo rural US voters ahead of the November elections, Brussels has a major headache brewing.

Donald Trump is furious at the EU’s protectionist stance on its agricultural sector. As he attempts to woo rural US voters ahead of the November elections, Brussels has a major headache brewing.
Garry white employee

by
Garry White

in Features

10.02.2020

The European Union (EU) thinks it can fob off Donald Trump’s anger at its trade protectionism by importing a few edible molluscs. But Brussels is likely to discover there is much more on Washington’s menu than a few oysters and mussels.  

President Trump thinks the EU is worse than China when it comes to trade protectionism – an issue he sees as a central tenet of his presidency. "In fact, unfair trade is perhaps the single biggest reason I decided to run for president," Mr Trump told Congress last week in his annual State of the Union address.

Mr Trump is now emboldened in his trade tactics, as US stock markets continue to hit record highs despite tariffs against China still being in place. However, the EU appears to be underestimating his resolve on this matter – and still believes it can strike a basic deal with Washington. On agriculture, it wants to recognise that US hygiene standards in shellfish were equivalent to its own, in return for opening up US markets for EU fruit such as pears. This will not be good enough for Donald Trump.  

Trade figures are revealing

Last week it was revealed that the US trade deficit with the EU hit a record $177.9bn (£137bn) 2019. However, the deficit in exports versus imports from China shrank to $345.6bn, 18% lower than the record high level of $419.5bn seen in 2018. This is a point that a braggart such as Mr Trump will continue to highlight, as the deficit with the world’s number two economy has risen almost every year since 1985.

China’s response to the coronavirus outbreak has involved the halving of tariffs on a raft of US goods, a move that will be regarded in Washington as a trade win against China. As his re-election campaign starts to get into top gear – now it’s Europe’s turn to feel the full force of the Trump trade guns.

A trade truce between the US and Europe was agreed in July 2018, avoiding punitive tariffs on European car exports to America. The then European Commission President, Jean-Claude Juncker, agreed that Europe would import more soya beans and liquified natural gas, with both sides working together toward zero tariffs on non-auto industrial goods. But Mr Trump’s trade rhetoric has been increasing in recent weeks, as his approval rating – and equity markets – soared.

Fraught talks ahead

Last week, EU Trade Commissioner Phil Hogan was in Washington to meet Robert Lighthizer, the US Trade Representative. The two men are attempting to get a framework together ahead of formal trade talks. European President Ursula von der Leyen met with Donald Trump when they were both in Davos, where she declared that a trade agreement was possible in a matter of “weeks”. This seems pretty naive. Washington wants much more than the EU is prepared to offer.

The main sticking point is likely to be agriculture, but the European Commission has refused to include this in the discussions, as the powerful agriculture lobby in places such as France continue to set the agenda.

Rural voters make up a significant part of Donald Trump’s base and he needs to keep them onside to win re-election in November. Last year, US Senator Chuck Grassley, chairman of the tax and trade-focused Senate Finance Committee, said a US-EU trade deal that excluded agriculture was “unlikely” to win approval in the Congress. “Elimination of industrial tariffs and non-tariff barriers only get us part of the way there, especially when we face major barriers to agricultural trade in the EU,” Senator Grassley, said. “Agriculture is a significant piece of the global economy and it simply doesn’t make sense to leave it out.”

Let them eat chlorinated chicken

Sonny Perdue, the US Agriculture Secretary repeated this view on a tour of Europe last week. Mr Purdue said that Europe would need to change its food hygiene regulations if the trade deficit was to be addressed. This implies that “chlorinated” chicken and hormone-treated beef imports are firmly on the US trade agenda.

The EU banned import of poultry treated with chlorine dioxide in 1997, while hormone-treated beef imports have been barred in the EU since 1989 over health concerns. “You are not going to get there with apples and pears and shellfish”, Mr Purdue said. “There are other things that need to happen”.

It’s very easy to see things from the US point of view. It would be absurd for Washington to start trade talks while the EU stubbornly refuses to allow access to this important sector. This means that a comprehensive trade deal between the parties looks near impossible. If this is the case, further tariffs raised on Europe later this year seem like an inevitability. Europe’s carmakers really do need to worry.

Mr Trump has delayed putting tariffs on European cars a number of times, preferring to leave the threat hanging over Europe like a Sword of Damocles. But Brussels should remain in no doubt that he is serious – and any tariffs are likely to be in the order of 25%.

This year is likely to be tough for the EU, as both the UK and America seek to restructure their trade arrangements. Europe’s powerful agricultural lobby want to prevent any deal being reached that will compromise the sector’s position – but this will have to be at the expense of its struggling auto industry.

The European Union will have to serve up more than a few oysters to sate Mr Trump’s trade appetite if it wants to keep French and German carmakers out of the firing line. Right now, this seems pretty unlikely.  

A version of this article appeared in Friday’s Daily Telegraph.

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