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Trump turns his tariff offensive to Europe

As May continues on her shuttle diplomacy mission, Trump ramps up his tariffs tactics against Europe.

Centtrip: All eyes on Powell testimony before Congress

Donald Trump yesterday, 18 February threatened to reignite a transatlantic trade war by imposing tariffs on European car imports.

The US Department of Commerce is due to release a report in which it will recommend classifying the European automotive industry as a threat to national security as it reduces the industrial base required for military hardware production. Admitting that he liked “punitive tariffs”, Trump wants to raise tariffs from 2.5 per cent to 25 per cent within the next three months. Brussels vowed to retaliate with “swift and adequate” measures.

In 2017, German car exports to the US were worth almost €27 billion. Europe’s largest economy just avoided recession, and the threat of tariffs could put further pressure on the beleaguered economy.

Meanwhile, UK Brexit negotiator Steve Barclay said he had a “positive meeting” yesterday with European Commission President Jean-Claude Juncker, focussing on the Northern Irish backstop issue. Juncker also said no one in the European Union would oppose an extension to Article 50 if it helps avoid a no-deal scenario.

Market participants will focus today on UK employment and wage data, which is expected to show the biggest growth in salaries for over a decade. With liquidity still low after a quiet day yesterday in the US, the reaction could be stronger than usual in currency markets.

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