The conversation at OECD headquarters on Wednesday failed to deliver the breakthrough that had been desired. And only 24 hours later, it was Ross who announced Trump's decision to impose the punitive tariffs on the Europeans. Since June 1, European companies exporting steel to the U.S. have been forced to pay a 25 percent duty on the import price, and 10 percent for aluminum. Chancellor Angela Merkel has denounced the move as "illegal."
Thehostile move by the Americans likely marks the start of a trade war that could cause lasting damage to both the American and European economies. This could be the beginning of a long-lasting feud consisting of punitive tariffs, tit-for-tat countermeasures and constantly evolving retaliatory strikes. The EU has threatened to slap levies on imports of whiskey and motorcycles from the U.S. in response. Trump, in turn, is reviewing whether he can impose higher tariffs on European car imports in the event of European retaliation.
Many jobs are at stake, particularly in Germany, and leading politicians are alarmed. "I warn against further escalation," said Lower Saxony Governor Stephan Weil of the center-left Social Democratic (SPD). The state is a shareholder in Volkswagen and Weil is also a member of the company's supervisory board. He said the "threatened punitive tariffs against the German car industry would lead to drastic countermeasures by the European Union. Both sides would suffer from this," he added. Researchers like Guntram Wolff, who heads the respected Brussels-based think tank Bruegel, hold similar views. "This second blow would be especially painful for Germany," he said.
But it's not just about trade balances and company profits. The speed with which the U.S. has been turning its back on the world order it has shaped since the end of World War II has been breathtaking. From global free trade, to common rules and a World Trade Organization (WTO) that mediates in cases of conflict, Trump is running roughshod over a system that seemed almost custom-built for the German economic model, which lives on exports.
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