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Trump tariffs are lose-lose for U.S. and EU, ambassador says

Relations between the U.S. and Europe took another hit Thursday when Commerce Secretary Wilbur Ross said the Trump administration would impose tariffs on European steel and aluminum. European Union Ambassador to the U.S. David O'Sullivan joins John Yang to discuss how the tariffs will affect the global economy and the alliance, plus the fallout from the U.S. withdrawing from the Iran deal.

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  • Judy Woodruff:

    And, as promised, we return to the brewing trade war between the U.S. and some of its closest allies.

    John Yang has that.

  • John Yang:

    Judy, U.S./European relations took another hit today, when Commerce Secretary Wilbur Ross said the administration would impose tariffs on European steel and aluminum.

    This comes after President Trump withdrew from the deal to contain Iran's nuclear program, a deal the E.U. helped negotiate and remains committed to.

    To talk about this, we're joined by David O'Sullivan, the European Union's ambassador to the United States.

    Mr. Ambassador, thanks for joining us.

  • David O’Sullivan:

    Thank you.

  • John Yang:

    The president of the European Commission, Jean-Claude Juncker, said today that what the — the United States' actions, he called them pure protectionism, pure and simple. He said the E.U. would respond with tariffs of their own on U.S. goods.

    Are we in a trade war?

  • David O’Sullivan:

    I don't think we're yet in what you could call a full-blown trade war, because the volume of trade involved in this dispute compared to the global volume of trade between the European Union and the United States is still relatively small.

    But it's an important divergence of view. We believe that these tariffs are unjustified and illegal under WTO rules. And we believe that it's important to push back and to use our entitlement under WTO rules to protect our interests and to impose tariffs on equivalent U.S. exports. So, yes, we're in a serious trade conflict.

  • John Yang:

    Serious trade conflict. You say, in the bigger picture of the total trade between the United States and the European Union, it's not a big deal.

    But what's going to be the impact of this in the United States and Europe?

  • David O’Sullivan:

    Well, the immediate impact will be to make European steel and aluminum exports to America more expensive, which is going to hit your companies who import these products and use them as part of the production process.

    Much of the European exports of steel and aluminum are high value, very specialized exports that are actually often not produced here in the United States, so this is going to cause problems for American industry and down the line for American consumers.

    It's also going to of course hit the profitability of European exporters, so we believe this is a lose-lose outcome. We wished not to be in this place. We proposed to the administration to have a much more positive agenda of how we grow trade between us, including addressing concerns that the administration may have, as we have sometimes concerns about our exports to the United States.

    And we think that would have been a much better place to be in than where we are tonight, which is forced into this imposition of tariffs followed by rebalancing on the European Union side.

  • John Yang:

    What's this doing to the overall relationship between the United States and the European Union?

  • David O’Sullivan:

    Well, it's not a positive, let's be frank.

    On the other hand, the relationship is broad and deep and strong. We're allies and friends still. We have had trade disputes in the past and we have survived them, so we hope that we will come through this and find a way through at some point.

    But it's not a good moment in transatlantic relations, unfortunately.

  • John Yang:

    Well, another point of friction in these transatlantic relations is the Iran nuclear deal.

    Is the E.U. going to be able to take some actions to protect European corporations who still want to invest in Iran, to protect them from U.S. sanctions?

  • David O’Sullivan:

    Well, I think it's very important to understand that, for the European Union, this is really an issue of regional security and indeed global security.

    We believe preventing Iran from obtaining or developing nuclear weapons is absolutely critical to the stability of the region, which is our region, and will impact heavily on us. And the nuclear deal does exactly that. And that's why we wish to preserve it and we wish to keep Iran in that deal, subject to the verifications and the inspections which enable us to be sure that Iran is not doing anything to develop nuclear weapons.

    The quid pro quo of that was, of course, that Iran would see sanctions lifted and would see increased economic and commercial opportunities to grow their economy, and that was the motivation.

    So, in order to keep this deal alive, and to keep Iran's feet to the fire on its side of the bargain, we have to deliver economic benefits. And that's what we're looking at, how to do that, in a situation where the United States has withdrawn and where the United States will put back sanctions which had previously been lifted.

    So we're exploring with our — amongst ourselves, with other allies and with the Iranians how to preserve economic and commercial interests and benefits for Iran out of this deal.

  • John Yang:

    Even before the United States withdrew from this deal, Iran was complaining that they weren't seeing enough of the economic benefits.

  • David O’Sullivan:

    Indeed.

  • John Yang:

    Are you — is Europe going to be able to provide enough incentive for Iran to stay in the deal?

  • David O’Sullivan:

    Well, it's a very good question. And time alone will tell, because, of course, this isn't just decided by what governments do. It's also decided by businesses. There are commercial decisions.

    I think it's clear that many big companies who have heavy investment and involvement in the United States probably will choose the American market over the more limited Iranian market. But there are much smaller, medium-sized companies who don't necessarily have the same interaction with the U.S. market who could be still very interested.

    And, of course, it must be said that I'm afraid the Chinese and the Russians are likely to the beneficiaries are this, because they will have no hesitation in stepping in where American or European firms no longer wish to invest.

    So this is a bit of a windfall profit for the Russians and the Chinese, as indeed are the — is the tariff dispute.

  • John Yang:

    Daniel O'Sullivan, the E.U. ambassador to the United States, thanks so much for…

  • David O’Sullivan:

    David.

  • John Yang:

    I'm sorry, David. I'm sorry.

    (LAUGHTER)

  • John Yang:

    Thanks so much for being with us.

  • David O’Sullivan:

    Thank you.

  • John Yang:

    Sorry.

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