Ex US trade official: Trump tariffs on Chinese goods could offer ‘top cover’ for EU measures

Donald Trump’s presidential campaign pledge to impose steep tariffs on Chinese goods could benefit the European economy by providing diplomatic cover for EU policymakers to introduce similar trade defences, according to Nazak Nikakhtar, a former top US trade official.

In an interview with Euractiv, the former assistant secretary for industry and analysis at the US Department of Commerce downplayed fears that Trump’s proposal to impose duties of at least 60% on Chinese imports and 10% on all other jurisdictions could harm the European economy by causing vast quantities of Chinese goods to be redirected and “dumped” on Europe.

Instead, she argued, they would lay the groundwork for EU policymakers to enact similar measures to protect the bloc’s faltering industrial base.

“Imposing these measures gives our allies top cover to pursue their own trade restrictions,” she said. “They always wait for the United States to move first. They’ve always told us that they wait for the US to go first, to give them cover.”

Nikakhtar, who served at the Department of Commerce during the latter half of Trump’s presidency from 2018 to 2021, also said that such tariffs would provide similar “cover” for US-based firms that are too afraid of Chinese retaliation to launch an official complaint against Beijing.

“The US auto sector, the semiconductor sector, the drone sector: all of them have some type of interconnectedness with Chinese supply chains,” she said. “If they brought cases against China, they will be obliterated by Chinese retaliation.”

Nikakhtar added that defensive trade measures are also key to contain the sale of EVs from other jurisdictions (such as Europe and South Korea) to the US market – as these economies struggle to compete with Chinese sellers at home and therefore turn to US buyers.

In this sense, US tariffs should be understood as part of a broader strategy to counter China’s “decimation” of competing economies through state-subsidised exports and other non-market policies.

“Europeans, Japanese, South Koreans [producers]: they can’t sell in their home markets because China has just decimated them there. They can’t sell to third-country markets because China has just decimated them there. So what are they going to do? They’re going to export their [e.g.] electric vehicles to the United States,” she said.

Nikakhtar’s comments come amid mounting trade tensions between European capitals and Beijing, as well as growing anger in the US and the EU at China’s increasingly close economic ties with Moscow following Russia’s invasion of Ukraine in February 2022.

They also follow the European Commission’s imposition earlier this month of provisional duties of up to 37.6% on China-made EVs.

The decision, which followed the US announcement of even steeper levies on a range of Chinese products in May, prompted Beijing to almost immediately announce an investigation into European pork exports, setting the stage for a wider trade war.

‘China is not going to reform’

Last week, European Commission President Ursula von der Leyen reiterated the importance of Europe “de-risking” rather than “de-coupling” from Beijing – that is, reducing its dependence on China across certain strategic sectors, such as critical raw materials, rather than ceasing trade across the board.

Nikakhtar, however, said that a decoupling of the EU’s and US’s economies from China is virtually inevitable.

“Countries are slowly starting to recognise that you cannot coexist with China as it is today,” she said. “China is not going to reform.”

“While the Chinese government has the sovereign right to engage in harmful economic behaviour and trade-distortive practices, all other countries also have the sovereign right to say: ‘You know what? I can’t do this. I can’t continue to trade with a regime that distorts its economy to decimate the rest of the world’s industries.”

Nikakhtar’s warnings echo recent arguments voiced by current top US administration officials.

In a visit to Brussels in April, Trade Representative Katherine Tai said European and US firms are currently struggling to “survive” against China’s “very effective” non-market system.

Tai also vehemently defended the use of appropriate “defensive” countermeasures, including tariffs, to protect Western manufacturers of steel, aluminium, solar panels, and EVs.

Trump is widely regarded as the favourite to win the US presidential election in November this year, although the projections’ trend has partly re-pivoted since Joe Biden’s withdrawal from the race on Sunday.

Vice President Kamala Harris is almost certain to be Trump’s opponent after securing enough party delegates to win the Democratic party’s nomination earlier this week.

[Edited by Anna Brunetti/Zoran Radosavljevic]

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