The Japan EU agreement spans over 600 million people. And there are several reasons why Trump will not like it.
On the eve of a G20 summit with Trump, the leaders of Europe and Japan signed a free trade agreement covering more than 600 million people, 30% of the global economy and 40% of total world trade.
They made clear that even as Trump shuns multi-nation trade deals, others are ready to forge ahead with them.
«We were able to demonstrate a strong political will to the effect that Japan and the EU will hoist the flag of free trade high amid protectionist trends, » Japanese Prime Minister Shinzo Abe told reporters.
Here are 3 reasons why Trump may hate the new deal.
1. It could hurt U. S. companies
The new deal will remove barriers to EU-Japan trade, but put some American companies at a disadvantage.
Case in point: cars. Under the agreement, Europe will gradually scrap tariffs on imported Japanese cars.
In turn, Tokyo has agreed to bring its standards for cars into line with the EU, which will make it easier for European automakers such as Volkswagen (VLKAY) and BMW (BMWYY) to sell their vehicles in Japan.
That could squeeze American automakers, who face 10% tariffs on exports to the EU. They’ll also face tougher competition in the Japanese market. After a similar deal with Seoul in 2011, European car exports to South Korea trebled in just four years.
The Trans-Atlantic Trade and Investment Partnership, a big trade deal between the EU and the U. S. that has stalled, would have removed import duties on American cars in Europe.
But there’s little prospect of those talks being revived in the current strained atmosphere.
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