Without an expectation of a larger market for European exports in the absence of additional opening up by Chinese authorities, European exporters should not enjoy the ongoing China-US negotiations.
President Trump and his trade team are set on a path of protectionism and economic nationalism. Trump’s intended measure raises four issues for the EU: the effect on European industry; how to deter Trump’s broader protectionist thrust; how to use the WTO Dispute System in this case; and, how to prepare for the contingency of a post-WTO or truncated-WTO world.
The reduction of current account deficits in euro-area countries since the 2008 crisis is strongly driven by increases in exports that dampened the effect on production of the fall in demand and imports.
The Volkswagen scandal has raised questions about the German model of production. If the success of the company’s diesel-powered vehicles was due in part to fraudulent efforts to conceal the amount of harmful pollutants they emitted, will similar revelations at other companies call into questions the country’s transformation from “the sick man of Europe” to an export-driven economic powerhouse?