German Central Bank Chief Says Tariff Exemption is not Free Trade

Bundesbank President Jens Weidmann said an exemption of the European Union from U.S. metal tariffs isn’t a victory for free trade, even if it reduces the risk of an escalation in the conflict.

Weidmann, a member of the European Central Bank’s Governing Council, welcomed the agreement that will exclude the block’s 27 members from punitive aluminum and steel duties that took effect on Friday, while warning that the EU’s respite was only temporary.

“It’s not a victory for free global trade because punitive tariffs remain in place for other countries that could not secure preferential treatment, ” he said in a speech in Vienna on Monday. “Therefore, the goal must be not only to prevent new barriers to trade or keep them as low as possible, but to reduce existing ones. I very much hope that recent signals from the U.S. to talk about such a reduction will not fizzle out, but trigger a change of perspective.”

Global finance chiefs were unusually blunt last week in warning that the U.S. is putting at risk the very international order that it helped create. At a G-20 meeting in Buenos Aires, they failed to convince Treasury Secretary Steven Mnuchin to pare back protectionist steps. Mnuchin’s response: “We are not afraid” of a trade war.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza