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Trade war is 'negative, negative, negative' for business, investors and consumers, ITC says

Ryan Browne

The U.S. trade spat with China and other countries is having a negative impact on business decisions and passing on the cost to investors and consumers as a result, the leader of a top trade organization has said.

"What I hear businesses say is that this is having an impact on the decisions they make, on the business decisions they make; that they are not making investment decisions because they fear that the turbulence is too high," Arancha Gonzalez, executive director of the International Trade Center, told CNBC's Joumanna Bercetche on Tuesday.

"I hear small businesses saying they have to absorb costs that are going to mean a lot for their bottom line simply because there is no way they can pass this onto consumers and then I hear other companies saying we are passing this onto consumers there's no way we can absorb this," she added.

"So all I know is this is negative, negative, negative: negative for business, negative for investors and negative for consumers. And if there was an issue about fairness in international trade, we haven't yet solved it."

The Trump administration has engaged in a tense war of both words and action with China, Canada , Mexico and the European Union over the past few months, both threatening and imposing trade tariffs on the basis that existing trade arrangements put the U.S. on an unequal footing.

The U.S. managed to secure a deal with Mexico and Canada to replace the North American Free Trade Agreement (NAFTA) following talks that went down to the wire in late September. However, Washington has not yet settled separate battles with Beijing and Brussels.

On Monday, Bloomberg News reported that President Trump plans to meet with his trade team to discuss a draft report on tariffs for European autos. The president has previously said he thinks the European Union is "almost as bad as China, just smaller."


There has also not yet been any resolution to the U.S.-Sino trade war, with tariffs having been lobbed at either side for months. However, Treasury Secretary Steven Mnuchin has reportedly resumed talks with Chinese Vice Premier Liu He, speaking over the phone on Friday, according to both The Wall Street Journal and Bloomberg News.


'No issue of unfairness' on EU-US auto trade

On the subject of European auto tariffs returning to headlines, Gonzalez said she hoped it was a negotiating tactic "because if it is not a negotiating tactic it sounds a little bit like managed trade." She added that there was "no issue of unfairness" in the trade of automobiles between the U.S. and the EU.

"There are a lot of American companies producing cars in Europe, and lots of European car manufacturers producing cars in the U.S.," she told CNBC.

"It is simply an expression of how manufacturing takes place today, with producers spreads across production chains that span across countries. That's the modern 21st century world, and it's normal. There is no such thing as this being unfair."

As things currently stand, the EU charges a duty of 10 percent on autos imported from the U.S., while the U.S. charges a tariff of 2.5 percent on EU car imports. Trump has said he wants to impose a 25 percent levy on all cars that are imported from the EU into the States.