European nations singled out for tariff hikes by Donald Trump could hit back with an economic sanction of their own.
While the eight nations, including the UK, Denmark, France, and Germany, are set to receive a 10% tariff on the price of goods, they could counter this with a “trade bazooka” move that could cripple the president’s clear hopes of subsuming Greenland into US control, according to a report.
A possible loophole could be exploited by seven of the eight sanctioned nations, with the European Union crucial to the plan should it come to pass. CNNcommentator Auzinea Bacon believes the Greenland stand-off could be set for an ugly continuation, and that some EU member nations would be pressed into causing economic disturbances in the US.
Trump levied the tariffs last week, furious that the nations were speaking out against his ambition to take over Greenland.
Bacon wrote, “Trump may have allowed for a loophole, however: Trump’s tariffs are directed at a select few member nations, not the entire European Union. So the eight countries could reroute trade within the EU’s free trade bloc to avoid those tariffs.
“An immediate 10% tariff won’t rattle the economy as significantly as the long-term effects of a strained relationship with America’s largest trading partners.
“It’s the uncertainty about whether Trump will escalate his tariff threats or back out before imposing new duties that could make trading partners steer clear of America long-term.”
An expert speaking with Bacon about the implied price hikes also suggested there may be a workaround of stock location to deal with. New York University Stern School of Business professor Joseph Foudy said that allied European nations could simply move stock from one location to another.
He said, “There’s no border between Spain, Italy, Germany and France. Anybody can ship a good through another country quite easily if we try and tariff individual states.”
Bacon went on to suggest the EU could inflict damage on the US economy should tariff prices remain against the member nations. Tariffs against the eight countries would rise from 10% to 25% on June 1 if an agreement is not reached.
Bacon said, “That triggered an emergency meeting of European countries’ representatives Sunday, and French President Emmanuel Macron reportedly asked the European Union to activate its so-called anti-coercion instrument, colloquially known as a ‘trade bazooka.’
“The trade bazooka could block some of America’s access to EU markets or impose export controls, among a broader list of potential countermeasures.
“The trade bazooka was created with countries like China in mind, not allies like the United States, noted Erica York, vice president of federal tax policy at the Tax Foundation.”
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