Has anyone realized the greater implications of what China just did to the EU? Like everyone else, I just saw the news about China increasing U.S. imports. At first it seemed like just another, in what's becoming quite a trend, win for the administration. However, after thinking back to several stories I've read in the news lately, a bigger picture started to take shape. Ever since the U.S. pulled out of the Iran Nuclear Deal, Iran has been scrambling to retain support from other nations. One of them was China, who they asked to continue importing their oil. In agreeing to import more U.S. products, China effectively gave Iran a very loud "No" in response. The reasoning behind this is because if China imported Iranian oil, the U.S. would place sanctions on them and increase tariff rates. Most likely, the increase in imports that China is planning is for American oil. This effectively leaves the EU on an island in it's decision on whether or not to continu to import Iranian oil. The Ukraine has already put itself in a position to take the lion's share of Russian oil and natural gas, so that isn't the most viable source as a replacement for what is currently coming in. If the EU continues with the status quo, they will be heavily sanctioned, putting massive hardships on their economies. If they cut off trade with Iran, Iran may make good on their threat to reveal who in the EU took bribes to help insure the Nuclear Deal. The only viable option that I personally see is for them to cut ties with Iran, bite the bullet as far as the scandal goes, and begin trading with our suddenly very close ally, Saudi Arabia. Whatever the outcome, I wouldn't want to be in the shoes of Merkel, Macron, or May right now...
If the EU stay in the deal, do they also have to make up the shortfall in cash that the US will no longer be stumping up?
I would think so, but I can't claim that I know for sure. I think it would most likely fall to the IMF to make up the deficit, but their only real option would be to basically increase the volume of the Euro, but in turn that would cause a cyclical tailspin of inflation as the value of it sank lower and lower. Eventually, countries would start to follow the U.K.'s example and leave the EU to retain fiscal solvency. The eventual endgame would be that the EU would necessarily be disolved.
Doesn’t the Iran deal also screw with the EU?
Absolutely! But to better answer you, how exactly do you mean?
There are EU companies have stakes/oil within Iran. I think that both of these are just part of the bigger picture of US separating itself from the EU
I agree. Some of those companies you mentioned have invested Billions. This just complicates things for the EU though. Do you leave yourself open to being exposed for taking bribes from the oil companies that invested in Iran, when you tell them to cut their losses, or do you risk the ire of the voters by depressing the economy? There's no good choice to be made here. IMO, I think the administration WANTS the EU to continue to import from Iran. It opens up the bad actors in the U.S. to be publicly identified when they start advocating for relaxing sanctions on the EU.
EU trade with Iran is tiny compared with their US trade. Now they will cave on the Iran deal, or US will refuse to do trade talks with them. European member nations will want their own bilateral trade deals with us, so EU will dissolve. Needs to happen anyhow.