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Analysts at ING suggest that the more worrying thing is the structural damage a US-EU trade war would bring to the principle of free trade.

Key Quotes

“In the eyes of many, the US has already crossed the line by using national security as a justification for tariffs on steel and aluminium. But using this loophole to dodge WTO- rules for possible restrictions on the import of cars is a clear abuse of the rule-based system of international trade that the US itself has helped to build after World War II.”

“With this abuse, the US has opened the door for other WTO members to break the rules too and Korea and Brazil have already done so. The ‘voluntary’ restraints that Korea and Brazil imposed on their steel and aluminium exports to the US are not allowed according to WTO rules. Other countries will be tempted to break the rules as well to avoid tariffs that the US threatens them with. The impact of the current talks and possible tariffs could, therefore, be far larger than the direct effects of the measures themselves.”