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On Wednesday, Donald Trump walked into the Rose Garden with Jean-Claude Juncker - the president of European Commission - and somewhat surprisingly declared a truce of the trade war that's been going on between EU and the US over the last two months.
This is why we agreed today, first of all, to work together towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. Thank you.
Now, I think when you look at the details of this quote, unquote "deal", is there's very, very few specifics. The important thing to say is they're going to stop fighting with each other. So there's basically a truce going on right now between the EU and the US, which is important for the EU because Trump had threatened a new round of sanctions on cars, which was a huge deal obviously for the German auto industry - which not only exports a lot to the US, but has a huge amount of operations of manufacturing facilities in the American south.
So in that respect, Juncker has fended off a rather bad threat to the EU. So in some ways you can say Juncker won this. On the other hand, there is no promise that Trump has made on anything. He has not promised to reduce the existing sanctions on steel and aluminium imports, which has already hit companies like Fiat - which announced earnings yesterday. The other thing, which I think has to go against Juncker in terms of credit, is the EU has said from day one it will not negotiate with a gun to its head.
It does not want to respond to Trump's threats. And it will not give in to Trump and negotiate with him with these threats hanging over them. Well, he did exactly that. All right? He went to Washington. He negotiated with a gun to his head. And it showed that Trump - by threatening Europe - can actually get them to move. And I think that is something he's going to go back to Brussels with face a lot of criticism for.
We've already seen the French, in particular - who have been the most hardlined against Trump for his protectionist measures - say that they don't accept any of this. They don't accept what Juncker has agreed to. And although the EU has authority over trade policy over the member states, it still has to be agreed-- particularly with France and Germany - to go through the EU agreement. So I think he got a temporary win. But I think in the end of the day it remains to be seen. As one person was quoted as saying in the FT, it's just one tweet away from reversing itself.
