Swedish Prime Minister Stefan Löfven had a message for US President Donald Trump: Tariffs will hurt everyone in the long run. Trump didn’t budge on his position for steel and aluminum tariffs in a meeting between the two leaders — but he at least reassured his European ally that any tariffs would be implemented in a “very loving way.”
Trump hosted his Swedish counterpart at the White House on Tuesday; Löfven is the first European leader to meet with the president since the administration announced it would impose a 25 percent tariff on steel and 10 percent tariff on aluminum. The European Union suggested it would retaliate against such measures by imposing tariffs on American-made products such as Harley Davidson motorcycles and Kentucky bourbon. Trump responded by threatening tariffs on European cars.
So it’s no surprise this looming trade war between the United States and one of its allies dominated the joint press conference.
Löfven, in his brief remarks, said, “Swedish prosperity is based on corporation competitiveness and free trade, and I’m convinced that increased tariffs will hurt us all in the long run.” He added that he supported the EU’s efforts to raise as few obstacles as possible in global trade.
But Trump, in a response to a reporter’s question, doubled down on his plan to impose tariffs and repeated his campaign talking points about the United States being treated unfairly in trade deals.
“The United States has been taken advantage of by other countries both friendly and not so friendly for many, many decades,” he said, complaining about what he said was the United States’ $800 billion trade deficit.
The US has a $566 billion trade deficit; it has about an $800 billion deficit in goods but a surplus of about $240 billion in services. Trump also complained about a $500 billion trade deficit with China; it was a $375 billion deficit in 2017. And Trump’s tariffs plan wouldn’t actually hurt China but would instead inflict the most pain on Europe and Canada.
President Trump on his decision to implement new tariffs: “We have been mistreated by many, sometimes fairly, but there are really very few instances where that's taken place ... I blame our leadership for allowing it to happen” https://t.co/NtCtdeymOE— CNN Politics (@CNNPolitics) March 6, 2018
Trump then launched into a rant against the EU’s trade policies — with the Swedish prime minister beside him. “The European Union has been particularly tough on the United States. They make it almost impossible for us to do business with them, and yet they send their cars and everything else back into the United States,” he said. “And they can do whatever they like, but if they do that, then we put a big tax of 25 percent on their cars.”
But Trump did hint that he was open to negotiating if the European Union removed some of its “horrible barriers,” though he didn’t mention specifics.
It’s not quite clear exactly what Trump is referring to in his remarks. The US trades more than $1 trillion in goods and services with the European Union. The trade deficit in goods with the EU added up to approximately $151 billion in 2017. In 2016, according to the Office of the United States Trade Representative, the United States also had a trade deficit in goods but a surplus of $55 billion in services. (Added together, it still came out to a total trade deficit of $92 billion.)
Trump didn’t seem alarmed by the possibility of an escalating trade war: “We’ll have to see; when we’re behind on every single country, trade wars aren’t so bad, do you understand what I mean by that?”
Q: How do you avoid this escalating trade war?— CBS News (@CBSNews) March 6, 2018
Trump: We will straighten it out. We'll do it in a very loving way. It will be a loving, loving way. They'll like us better and they'll respect us much more. https://t.co/a8Xtbf7VFe pic.twitter.com/5qlLuWRmSD
Trump suggested that when the US suffers billion-dollar trade deficits, “the trade war hurts them, it doesn’t hurt us. So we’ll see what happens.” But he said even if there is a trade war, the US will impose tariffs “in a very loving way. It will be a loving, loving way, and they’ll like us better and they’ll respect us much more.”
Trade wars are a particularly unnerving prospect for many exporters in other countries, since retaliatory actions can spiral out of control. On Saturday Trump tweeted that if the European Union does, in fact, issue retaliatory tariffs, then he will retaliate against their retaliation, by slapping tariffs on European cars. If that happened, it’s possible Europe would once again try to even the score. The cycle could continue indefinitely.
If trade wars continue for a long time, they can have a devastating impact on countries’ economies. They can severely affect entire industries, cause unemployment to spike, and raise the price of vital goods in both or all of the countries involved. And with a president who misguidedly believes trade wars “are good and easy to win,” that worst-case scenario doesn’t seem far-fetched.
Trump is signaling he’s keeping a campaign promise to protect American workers and industry. But economists and members of his own party have rejected his stance, warning that it could backfire against American consumers and manufacturers and end up hurting the US — and relations with allies — more than it would protect the steel and aluminum industries.
But if Trump’s press conference didn’t make clear he’s forging ahead with protectionist policies, the news that broke later Tuesday afternoon definitely did. Gary Cohn, the head of Trump’s National Economic Council and an opponent of tariffs within the White House, is leaving the administration.