MNI INTERVIEW: Informal Talks Over Trump Reprisals-Malmstrom

MNI (BRUSSELS) - European Union countries are in informal talks with other nations to “strike back” if Donald Trump returns to the White House and imposes tariffs on exports to the U.S., former EU Trade Commissioner Cecilia Malmstrom told MNI.

“If Trump slaps tariffs on us in a random way, I think Europe, together with Japan, New Zealand,  Australia and others, will have to strike back, as we did with steel and aluminium five years ago and coordinate to do that jointly in a measured WTO-compliant way just to make sure they don’t bully us,” said Malmstrom, who was trade commissioner at the time of Trump's first presidential term.

“I know there are informal discussions going on so I hope they will do this in cooperation with others,” she said in an interview, adding that the approach would be “You have no right to do this, so we strike back and then let’s talk’.” 

The EU needs to go further and aim to get rid of existing US tariffs on EU steel and aluminium, she said.

Malmstrom said also that China’s continuing support for Russia will make the EU’s relations with Beijing “very difficult,” and a trade war cannot be completely ruled out, despite a move by Brussels to slightly reduce tariffs it has imposed on Chinese electric vehicles. (See MNI: EU To Maintain Piecemeal De-Escalation On China Trade)

“I would say we should, but I am not sure that will happen,” she said, when asked if trade war can be avoided. “As long as China keeps supporting Russia the way they do there cannot be a complete detente.”

ANTI-SUBSIDY PROBES

The EU is conducting anti-subsidy investigations in several areas, including wind turbines, she noted.

“Will they propose tariffs on those as well?  Who knows. This Commission will not do it, but as from December maybe the next Commission [will]...” 

While EU-China relations will be partly determined by the composition of the next Commission as well as “the current mood in (EU) the member states,” Malmstrom questioned whether reducing imports of Chinese EVs is the most efficient way of managing the EU’s green transition.

“The Commission is under a lot of pressure because the European companies have been slower and they are putting a lot of pressure on the Commission to act, but the truth is also we need affordable EVs in Europe that are high quality and our European companies cannot provide sufficient of that,” she said. “The Chinese are subsidising their EVs - absolutely – but they do it in a wrong way and not according to the rules but they are also subsidising our green transition, we need these cars.”

Imports of China-made EVs into Europe are already coming down, she noted, though she added that it remains to be seen whether this trend will continue.  

“I am not sure this is the most efficient way to go for the green transition, to slow down the development, the rolling out of electric cars but the politics makes this a fact,” she said.