Via Financial Times

Robert Lighthizer, the US trade representative, suggested the Trump administration was ready to escalate its trade confrontation with the EU, potentially through new tariffs, after sealing a truce with China and enacting the USMCA agreement with Canada and Mexico to replace Nafta.

In an interview with the Fox Business Network on Tuesday, Mr Lighthizer said the US had a “very unbalanced relationship” with Europe on trade, with an annual bilateral deficit of up to $180bn this year, which was unsustainable for Washington. 

“There are a lot of barriers to trade there, and there are a lot of other problems that we have to address. So, dealing with Europe is something that’s very important and the president has focused on,” Mr Lighthizer said.

“We’ve put tariffs in place on a variety of products, and we’re going to continue to focus on that. It’s something the president cares about. You can’t get the global trade deficit down without getting the trade deficit down with Europe,” he added. 

Mr Lighthizer tempered his remarks by saying “a lot” of transatlantic trade was “very positive” and he did not want to “overstate” the commercial rifts with Brussels. But an escalation in trade tensions between the Trump administration and officials in Brussels and other EU capitals could be in store for early next year.

After placing tariffs on $7.5bn of EU goods in October, as allowed by the WTO in a dispute over aircraft subsidies, the US has threatened to increase those tariffs, which affect goods ranging from Italian cheese to French wines and British whisky.

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In addition, the US has said it is prepared to slap new levies on countries that were pursuing digital sales taxes, starting with France, after a public comment period on the proposed punitive measures is concluded in January. The Trump administration has so far refrained from imposing levies on automotive imports from the EU, but it has not ruled them out either. 

“We have a basic trade problem with Europe. We have to figure out a way to sell more in Europe. And I think we’re going to undertake that,” Mr Lighthizer said. 

Following the Conservative victory in the UK general election last week, with prime minister Boris Johnson set to expand his majority and take the UK out of the EU on January 31, negotiations with the Trump administration on a bilateral deal are expected to ramp up. 

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“For sure, the UK is a priority. As soon as they get their objectives agreed to, we’ll start talking,” Mr Lighthizer said, while cautioning that a quick timeline could not be guaranteed. “It will take a while before it all comes into effect because of their circumstance. It’ll be a really big deal. We’re looking forward to that negotiation.”

Mr Lighthizer, a former lawyer at Skadden Arps who represented the US steel industry, rarely gives media interviews or briefings but has increased his public appearances after the “phase one” deal with China was agreed last week. 

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“This is about taking the first big step to determine whether or not two different systems can work together in the future to their mutual benefit,” Mr Lighthizer told FBN. “And that’s what the president has asked us to do. And then we’ll move forward. We’ll see how this goes, and we’ll see how it’s implemented.”

Mr Lighthizer spoke as lawmakers on the House ways and means committee, which oversees trade, were preparing to give the green light to the USMCA pact, ahead of a full vote to ratify the deal in the House of Representatives on Thursday. The agreement will them move to the Senate, with a vote expected early next year.