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But both the playing field and the participants have changed since the founding of the WTO in Europe has gained economic power, and China's ascent to become a global power accelerated after its became a WTO member in Trump is now openly attacking the organization. He's trying to convince himself and voters that WTO rules are the reason for the high trade deficit the U.
At the same time, political policy can only exert limited influence on this phenomenon. Generally, surpluses and deficits are the product of decisions freely made by consumers and investors.
One contributing factor to Germany's export surplus is the German propensity to save their money. Those savings are often invested in the U. Trump himself is also partly responsible for causing the U.
After providing American tax payers with a multi-billion-dollar, debt-financed tax rebate, he shouldn't be surprised that imports swell as American demand for foreign products increases. But Trump believes he can lower the deficit by instigating a trade war. So, he's building up pressure against the trade partners he feels are fleecing him, says Rieck, the game theory expert. He says the back and forth on the steel ultimatum has all the hallmarks of a game of chicken.
If neither side relents, then it is possible that both cars will be totaled. This, he says, has made Trump's threat less credible and it has weakened his negotiating position. Meanwhile, the other player in this game of chicken is divided over whether it should hit the brakes and yield to Trump or not. The German government has signaled a willingness to accommodate the U. The reason for the difference is that the automobile industry, and particularly the U.
The French government also fears a comprehensive restructuring of the trade relationship between the EU and the U. Because whereas Germany has a trade surplus with the U. In addition, a review of rules affecting the agricultural sector would also be part of a new trade deal between the U. In the last deal, the French succeeded in closing off their agricultural sector from strong competition.
Finally, France wouldn't be much affected by the steel tariffs threatened by the U. Ultimately, though, neither Merkel nor Macron is sitting in the driver's seat on this issue. And despite the new deadline, she is preparing for a trade war with the Americans.
The EU's weapons are already known: They range from tariffs on bourbon and go all the way up to Harley-Davidson.