Friday 18 January 2019

Trump, trade and tariffs: Varadkar's US challenge

Relations with the US are strained as Leo Varadkar makes his first official trip to Washington, writes Philip Ryan

US President Donald Trump had a frosty reception for Enda Kenny in the Oval Office of the White House last year and it doesn’t look any better for Leo Varadkar as trade wars kick off. Photo: Getty
US President Donald Trump had a frosty reception for Enda Kenny in the Oval Office of the White House last year and it doesn’t look any better for Leo Varadkar as trade wars kick off. Photo: Getty
Philip Ryan

Philip Ryan

Taoiseach Leo Varadkar's first official visit to the White House comes at a time of especially strained relations between the US and the EU.

Transatlantic relations have deteriorated rapidly since Donald Trump's inauguration as president of United States of America and they are about to hit a new low.

Trump's outwardly nationalistic and isolationist policies have disturbed EU leaders since the businessman's shock election victory.

Major US policy shifts on immigration, climate change and tax have sent shockwaves through Brussels and beyond.

Trump's unpredictable nature led to German Chancellor Angela Merkel announcing that the EU could no longer "completely depend" on the US, adding: "Europeans truly have to take our fate into our own hands."

Back in America, Trump is fending off allegations that he paid porn star Stormy Daniels to keep quiet about their relationship before his presidential campaign, while simultaneously dealing with the continuing fallout from Russia's interference in the same election.

All this and now the former reality star host has decided to start an international trade war with his allies in Europe and the East by slapping tariffs on steel and aluminium imported into America.

The tariffs are aimed at rejuvenating the country's steel industry and tie in with Trump's nostalgic vision of America in the good old days.

Europe has responded in kind. European Commission president Jean-Claude Juncker described the new steel tariffs as "stupid" and promised that the EU would hit back with its own taxes on US imports. China is also gearing up for a trade war, which is to nobody's benefit.

The day before the Taoiseach visits the White House, the EU will set out its formal response to Trump's tariffs. This could include new import taxes on US tobacco, bourbon, motorcycles, oranges and peanut butter.

This is the backdrop as Leo Varadkar prepares to enter the lion's den that is President Trump's Oval Office. The Taoiseach knows he is meeting the president as a representative of both Ireland and the EU.

Last Thursday evening, Varadkar hosted European Commission president Donald Tusk in Government Buildings. They discussed the potential trade war at length and agreed to speak again before the Taoiseach's White House appointment.

There is division in the heart of Europe over how to deal with Trump. Tusk wants to take a tactical and less confrontational approach to the US president (and Varadkar agrees with him), while Juncker is more gung-ho and up for a scrap.

"Both Tusk and Varadkar are less enthusiastic about a tit-for-tat than Trump and Junker seem to be," a source said. Varadkar's meeting with Trump could ease transatlantic tension and will be the first real test of his international diplomatic skills. It's all well and good hosting EU neighbours or even British leaders, taking a pacifist approach to negotiations, but it will be an entirely different when it comes to the bullish and aggressive US president.

Ministers travelling to the US for St Patrick's Day have been briefed on messaging around the trade tariff conflict before their visits.

Briefing documents seen by the Sunday Independent say the steel and aluminium tariffs raise a "systematic concern". Ministers will tell US dignitaries and politicians that Ireland fully backs "the adoption of immediate and commensurate countermeasures, if necessary".

"Ireland's preference would be to see any US imposition of tariffs dealt with at the WTO (World Trade Organisation), however, any such process could take a number of years to resolve with the possibility of substantial damage being caused to EU exports in the interim," the briefing states.

Trade war aside, Varadkar's advisers are expecting a warm reception in the White House. Trump has surrounded himself with Irish-Americans since taking office and Enda Kenny was well received when he made the Stateside journey last year.

When speaking to Trump, the Taoiseach will pitch Ireland as America's "bridge to Europe" after the UK eventually leaves the union. It's a tough sell to a president who has supported Brexit and made former Ukip leader Nigel Farage his unofficial ambassador to Britain.

But will Trump one day visit Ireland as many US presidents have in the past? A senior government source told the Sunday Independent the invitation extended to the US president by Enda Kenny "still stands" and the controversial businessman was welcome to visit Ireland at his convenience. "The invitation was issued by Enda Kenny and it's still here and won't be retracted," the source added.

*******

Brexit is another big focus of the St Patrick's Day trade mission this year. Last Wednesday evening, just after 7pm, a group of ministers and advisers gathered in Tanaiste Simon Coveney's office in Government Buildings for a full briefing on the talks in Brussels. It had been decided at Cabinet the previous day that ministers should be given a refresher course on Brexit ahead of the St Patrick's Day exodus. Ministers were also keen to be given a heads-up on possible developments in negotiations which might take place while they are away.

The week after ministers arrive back from their globetrotting, the Taoiseach will leave for Brussels for a high-stakes EU summit on Brexit.

At this point, it is hoped a legal agreement will be reached between the EU and our neighbours on the thorny issue of the Northern Ireland border and the transition period before we finally say farewell to Britain.

So it is hugely important that ministers stay on message when they are swanning around international soirees.

In his office, Coveney talked through events of recent weeks and what he expects to happen in the coming days ahead of the March 22-23 EU summit. There are complexities around Brexit that some ministers wouldn't have come across due to their portfolios.

The Government is proud that there hasn't been a Brexit-related gaffe by ministers at home or abroad. But there is a fear that a wrong word or misunderstanding of policy could derail the talks or be pounced on by those Tories who back Brexit. "It was an attempt to make sure everyone is across Brexit before they go away," a source at the meeting said.

Criticism of the British government will form an integral part of the St Patrick's Day missions. This has been going on for the past year or so, but ministers are expected to amplify the rhetoric against the UK in seeking to sell Ireland as a location to do business in the post-Brexit world.

Coveney told the meeting he has been "heartened" by the support the EU has shown Ireland since talks began.

"The UK fully expected the EU to tap Ireland on the shoulder at some stage and say 'look if you don't mind we'll come back to the border later', but the solidarity has been astounding," a source said.

Coveney's assurances were copper-fastened with the arrival of Donald Tusk last Thursday. The former Polish prime minister put to bed any suggestions that the Northern Irish border would be parked while other areas of the Brexit deal were thrashed out.

"If in London someone assumes that the negotiations will deal with other issues first before moving to the Irish issue, my response would be 'Ireland first'," Tusk said following the meeting with Varadkar. All very positive for the Government as it jets off to charm and schmooze dignitaries and world leaders.

However, one government source insisted Ireland will not become a "vessel for the EU". "It's actually dangerous for Ireland to be seen as Europe's puppet," the source added.

Sunday Independent

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