New Front for the Trade War?
Just days after the US signed a Phase 1 trade deal with China, the Trump Administration hinted that it may have a new front for the trade war: Europe. The root of the budding trade dispute with Europe centers around a “digital tax,” a 3% levy on American tech companies earning revenue in France. The issue had taken broader appeal once the European commission had unveiled a proposal for taxing US tech companies across the 28-nation European Union, a move that the Trump administration warned would result in tariffs on European goods.5 A trade war with Europe would bring a far wider range of goods into play, since the US exports three times more to the European Union than it does to China. With the European Union already posting feeble growth amid rising political uncertainty, however, US tariffs would surely sting at a vulnerable time.