The German rubber and plastics machinery manufacturers trade association VDMA has denounced a growing trade war between the U.S. and the European Union, saying the dispute is “getting down to the nitty-gritty.”
Despite efforts to defuse the conflict, President Donald Trump's threat to impose a punitive tariff of 20 percent on cars from Europe remains unresolved, said VDMA in a July 5 statement.
"This and the countermeasures announced by the EU would mean significant cuts in bilateral trade. We'll get down to the nitty-gritty," warned VDMA Executive Director Thilo Brodtmann.
The VDMA has called on the EU to “take the offensive” and set transatlantic free trade negotiations in motion.
According to German officials, an exclusive reduction in car tariffs with the U.S. will not work, as World Trade Organization-compliant tariff reductions can only be implemented with all trading partners on board.
“We are calling for a lean free trade agreement with the U.S. that will remove all industrial tariffs and non-tariff barriers to trade,” noted Brodtmann.
This, he added, would remove the issue of bilateral customs duties “once and for all."
The announcement came just a day ahead of U.S. trade tariffs on $34 billion Chinese goods started, amid threats of further retaliatory measures.
"This ‘tit-for-tat'-game between two major economic blocs is likely to put a strain on global trade as a whole because of the complex and fragile supply chains,” the VDMA executive noted.
This, he warned, could set a precedent for other trading partners.
"The only acceptable way to address what the U.S. calls China's unfair trade practices is to take them to the WTO arbitral tribunal. Both the EU and the U.S. have taken this path," explains Brodtmann.
According to VDMA, the mechanical and plant engineering industry in Germany has been affected by the trade dispute between the U.S. and China.
This, VDMA said is because “almost all” mechanical engineering products are included in the first U.S. list of punitive tariffs, affecting VDMA member companies that supply the U.S. from their production facilities in China.
Plastics processing machinery and molds fall under President Trump's additional 25 percent in tariffs on China-made goods that began July 6.