Surprise, Trump Is Overhyping the Trade Issues With Europe

In response to U.S. President Donald Trump's threatened tariffs on European imports such as steel, aluminum and cars, the European Union is threatening to slap a 25 percent duty on jeans, cosmetics, bourbon and Harley Davidson motorcycles. This is an intentionally cartoonish list of U.S. staples designed to portray Trump's attempt at a trade war as a farce. And indeed, if Trump were serious about fixing the U.S. trade imbalance with Europe, these tariffs are the last thing he should want. Instead, he should ask statisticians from both sides to sit down together and work out what's really behind the imbalance.

According to EU data, in 2016, the U.S. imported some 5 billion euros ($5.55 billion at that year's average exchange rate) worth of European steel. The reverse flow was worth about 1 billion euros. U.S. aluminum imports from Europe amounted to about $500 million. These are tiny numbers given the scale of EU-U.S. trade in goods, worth about 600 billion euros in 2016. If Trump decides to hit cars with tariffs too, that would be more important: The EU's surplus from trading in "automotive products" with the U.S. is a whopping 35.9 billion euros.