Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19
Will Stock Market 2019 be like 1999? - 14th Feb 19
3 Charts That Scream “Don’t Buy Stocks” - 14th Feb 19
Capitalism Isn’t Bad, It’s Just Broken - 14th Feb 19
How To Find High-Yield Dividend Stocks That Are Safe - 14th Feb 19
Strategy Session - How This Stocks Bear Market Fits in With Markets of the Past - 14th Feb 19
Marijuana Stocks Ready for Another Massive Rally? - 14th Feb 19
Wage Day Advance And Why There is No Shame About It - 14th Feb 19
Will 2019 be the Year of the Big Breakout for Gold? - 13th Feb 19
Earth Overshoot Day Illustrates We are the Lemmings - 13th Feb 19
A Stock Market Rally With No Pullbacks. What’s Next for Stocks - 13th Feb 19
Where Is Gold’s Rally in Response to USD Weakness? - 13th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

As Trade Wars Broaden, Europe Is the Key to Future

Politics / Protectionism Jul 10, 2018 - 11:44 PM GMT

By: Dan_Steinbock

Politics As the Trump White House has started the “biggest trade war” in history, diplomatic activity is escalating from the transatlantic axis to China and the EU – America’s next tariff target.

After the meeting of China and Central and East European (CEE) countries in Sofia, Bulgaria, Chinese Premier Li Keqiang rushed to the fifth round of intergovernmental consultations between China and Germany.


These visits have been overshadowed by the specter of the U.S. trade wars that are about to broaden over Europe. In few days, Trump will start his own European visit to attend the NATO summit in Brussels, meet with Queen Elizabeth and Prime Minister May in the UK, and to sit down with Vladimir Putin in Helsinki in mid-July.

The White House will seek to push US NATO allies to finance a greater share of the joint military expenditures, strengthen Anglo-Saxon ties against Brussels and to warm its relationship with Russia amid the new U.S.-led Cold War. Behind the façade, the Trump administration seeks to deflect attention from the impending U.S.-EU trade war.

CEE-China 16+1 cooperation will broaden             

Established in 2012, the talks between China and CEE countries have supported faster development as trade volumes have soared to $68 billion last year, which translates to 16 percent growth on a year-to-year basis.

After the CEE economies were harmed by the global financial crisis and the subsequent European debt crisis, China’s economic contribution has been vital. From Beijing’s perspective, the CEE countries, along with key Mediterranean economies, have served as China’s foothold to Europe and the early development of the One Road One Belt (OBOR) initiatives, particularly in Eastern Europe.

From the standpoint of the CEE countries, the 16+1 Framework has been economically important by boosting Eastern Europe’s role and leverage within the EU.

As Brussels’ focus has been on European sovereign debt, massive bailouts, the UK Brexit and new disintegration pressures, the CEE economies, which used to be EU priorities in the early ‘90s, have been effectively ignored.

China’s strong contribution to global economic prospects, which amounts to 30 percent of global economic growth, has supported the resilience of the CEE economies, even amid Washington’s unilateral trade wars.

Joint interests in peace and stability, trade and investment provide a deepening basis for 16+1 cooperation in the future.

Converging Chinese-German interests        

If CEE is China’s door to Eastern Europe, Germany remains the key to advanced Europe. Following the establishment of strategic partnership in 2014, Chinese-German relations have steadily broadened not just in trade and investment, but in technology and innovation.

While joint interests in the bilateral ties are increasing, the underlying environment is growing more challenging. As Chancellor Merkel seeks to sustain integrated EU, she has been under fire from Bavarian conservatives in her government, due to a challenge by Interior Minister Horst Seehofer about immigration policy.

For 60 years, Merkel’s Christian Democratic Union (CDU) has relied on its junior partner, the conservative Christian Social Union (CSU). The dispute about immigration has eroded the ties, even though Merkel contained the friction by agreeing to more hawkish immigration policy.

As German growth is slowing and German exporters have been harmed by U.S. trade friction, the political support of CDU and CSU has eroded, while the ratings social Democrats (SDP) have sunk to below 20 percent. The beneficiary of these trends is the radical right’s Alternative for Germany (AfD).

For now, Merkel’s cautious diplomacy does prevail in Berlin and Brussels, yet Trump’s trade stance will mean more headwinds in the fall.

China-EU cooperation              

While China is US tariffs’ first target; the next ones will include some of the largest trading economies in Europe, East Asia and Americas. In the process, the joint economic (trade and investment), political (international cooperation), even strategic interests (Iran, climate change) between China and the EU, and Germany, are converging.

Last week, Merkel explicitly warned President Trump not to unleash an all-out trade war after U.S. president threatened to impose steep tariffs against the EU. The White House is mulling import taxes of 20 percent on EU cars. The EU has already slapped tariffs on US products including bourbon, jeans and Harley-Davidson motorcycles, as a symbolic tit-for-tat response to the metals duties.

But that’s just a warning shot. Merkel has targeted Trump over his complaint that the EU, in particular Germany, is running a massive trade surplus against the US. These calculations are flawed because they are only based only on goods, not services in which US has a surplus against the EU. Accordingly, Merkel backs a “digital tax” that would target multinationals like Amazon, Facebook or Google, which have come under fire for shifting earnings around Europe to pay lower taxes.

Both Berlin and Brussels are beginning to face the inconvenient truth. Without a coordinated response, Trump’s “America First” doctrine will foster the risk of an all-out trade war, which would hurt global confidence, economic growth and credit.

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

© 2018 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules