Five Star and Trump have Brussels panicking
Last weekend’s Italian poll saw no clear winner but support for the Northern league and Five Star Movement rocketed, creating a nightmare for Brussels.
Both parties have spoken out against closer EU integration and have made their distaste for the single currency clear.
Meanwhile, Donald Trump is refusing to back down on his tariffs for steel and aluminium, sparking threats of EU retaliation.
In the meantime, the Euro has plunged by two percent against the dollar since the start of February and banking chiefs fear there is a further slowdown to come.
Despite positive words from the European Central Bank (ECB), some think the outlook is bleak.
The ECB is currently increasing its bond-buying strategy as part of a massive stimulus.
But German trade figures are still pointing to a decline in export growth and there is concern other countries could face a similar fate.
And Brussels is worried that dialling back its quantitative easing support could see eurozone growth completely unravel.
The Euro could face a crisis
David Kohl, strategist at Julius Baer, told the Financial Times: “The odds that the euro will correct to 1.20 in the short term remain unchanged as the currency has failed to rally sustainably on the back of less dovish ECB rhetoric.”
Mr Trump set import tariffs on Thursday of 25 percent on steel and 10 percent on aluminium.
The EU executive said it wanted details from today’s talks with US Trade Representative Robert Lighthizer in Brussels but that it did not expect the meeting to resolve all the problems.
European Commission Vice President Jyrki Katainen said: ”We need a dialogue with the United States. It’s clear. We need clarity.
Donald Trump could spark a trade war
“We are an ally, not a threat.
“This is not a trade negotiation. Now we are talking about unilateral action against international rules, and we want to sort it out before it really becomes a problem.”
The European Commission, which coordinates trade policy for the 28-nation EU, the world’s biggest trading bloc, has said it is ready to impose safeguards, tariffs or quotas to protect its own steel and aluminium industries from products diverted to Europe because of the US measures.
It has already started monitoring incoming metal flows to see whether a surge occurs.
The EU is also maintaining a threat of counter-measures that would target US imports ranging from maize to motorcycles, and may publish its list next week to allow industry and other interested parties to give their input.
Under World Trade Organisation rules, such counter-measures have to be in place within 90 days of the US tariffs entering force.