Nations puzzle over how to respond to US trade war as global markets implode

Brussels, Apr 7: America's trading partners wrestled with responses to US President Donald Trump's blast of tariff hikes and some planned to send negotiators to Washington, while the head of the European Union's executive commission offered mutual reduction of tariffs to zero on some goods.

"We stand ready to negotiate with the United States,” said commission President Ursula von der Leyen. “Indeed, we have offered zero for zero tariffs for industrial goods, as we have successfully done with many other trading partners. Because Europe is always ready for a good deal."

But she warned that "we are also prepared to respond through countermeasures and defend our interests."

China has already hit back against the US with retaliatory tariffs and similar actions from Europe and elsewhere remain a significant possibility.

The US and the EU had a zero-for-zero deal on wine and spirits from 1997 to 2018, and reducing many tariffs to zero was a goal of complex negotiations for a US-Europe free-trade deal before negotiations stalled in 2016, during the first term if US President Donald Trump.

Yet there was little indication Trump is ready to deal. The EU trade commissioner, Maros Sefcovic, spoke for two hours with Trump administration Friday and would say only that "we stay in touch."

And White House trade adviser Peter Navarro told CNBC on Monday that an offer by Vietnam to eliminate tariffs on US imports would not lead to a pullback on the newly announced 46% levy on its imports to the US.

"Let's take Vietnam. When they come to us and say we'll go to zero tariffs,' that means nothing to us because it's the non-tariff cheating that matters,” Navarro said on CNBC

Major trade partner China was taking a tougher line and accused the US of “bullying” after imposing a 34% tariff on Friday on all US goods, the exact same rate Trump slapped China with in his latest round of new import taxes.

Several other countries said they were sending trade officials to Washington to try to talk through the crisis, which has cast uncertainty over the global economic outlook, hammered markets and left US allies wondering about the value of their ties with the world's largest economy.

European Union trade ministers were closeted Monday in Luxembourg to weigh possible steps that could include taxes on US tech companies like Google, Apple and Amazon. The European Union's executive commission - which handles trade issues for the 27-country bloc - is set to impose tariffs on Jeans, whiskey and motorcycles on Wednesday in response to Trumps increase in steel and aluminum tariffs.

But it hasn't decided a response yet to Trump's “reciprocal” tariff of 20% on European goods announced Wednesday and a 25% tariff imposed on autos from everywhere. French officials have raised imposing tariffs on services like internet commerce or financial services, where the US sells more than it buys from Europe and is in theory more vulnerable than in goods trade.

Germany's economy minister, Robert Habeck, was defiant as he arrived, saying the premise of the wide-ranging tariffs was “nonsense” and that attempts by individual countries to win exemptions haven't worked in the past.

It's important for the EU to stick together, he said. That “means being clear that we are in a strong position — America is in a position of weakness.”

So far the European approach has been to selectively target politically sensitive goods rather than impose sweeping retaliation since like most economists officials they view tariff wars as a lose-lose game.

China, which hit back Friday at Washington with 34% tariffs on US products and other retaliatory moves, sharply accused the US of failing to play fair. “Putting America First' over international rules is a typical act of unilateralism, protectionism and economic bullying,” Foreign Affairs spokesperson Lin Jian told reporters.

The ruling Communist Party struck a note of confidence even as markets in Hong Kong and Shanghai crumpled. “The sky won't fall,” declared The People's Daily, the party's official mouthpiece. “Faced with the indiscriminate punches of US taxes, we know what we are doing and we have tools at our disposal.”

China's Commerce Ministry said officials met with representatives of 20 American businesses including Tesla and GE Healthcare over the weekend and urged them to take “concrete actions” to address the tariffs issue.

During the meeting, Ling Ji, a vice minister of commerce, promised that China will remain open to foreign investment, according to the readout by the ministry.