It is always interesting to see international news from a foreign perspective. Thus, as noted here, President Trump has concluded a trade deal with the European Union. Based on coverage in the London Times, the agreement is an excellent one for the United States:
The terms of the Turnberry Accord, which have yet to be published, establish a minimum 15 per cent tax on most European imports to the US and commit the bloc to buying hundreds of billions of dollars of US energy and investing in the world’s largest economy.
The contours of the deal mirror the agreement struck between the US and Japan last week….Trump has also inked tariff agreements with the UK, Vietnam, Indonesia and the Philippines, and talks with Beijing over a planned 40 per cent levy start in Sweden this week.
The US-EU truce in Scotland this weekend concludes months of fractious talks in which Brussels unsuccessfully tried to bring Trump back to a 10 per cent baseline tariff that the UK will be subject to. The two sides have still landed below a threatened 30 per cent tax that would have devastated export industries such as cars and pharmaceuticals.
So the United Kingdom did better than the EU.
Investors have taken far more comfort in the agreement than its signatories on the continent. France’s prime minister dubbed it a “submission”; Olivier Blanchard, a former official at the International Monetary Fund, called it a “defeat”, while Hungary’s Viktor Orban has used it to attack the European Commission for being “eaten for breakfast” by his ally, Trump. Orban copycat, the Alternative for Germany, called it a “slap in the face”.
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Brussels has since admitted that its negotiating leverage was massively hindered by the fact that the talks were “not just about trade”, according to its chief negotiator, Maros Sefcovic. The White House weaponised its security guarantees and Ukraine as part of the talks, the trade commissioner said on Monday.The Europeans are rightly lamenting their toothlessness in the talks.
So the bottom line is that President Trump negotiated aggressively on behalf of his country, and got us favorable terms. When Trump first entered the political arena, he vowed to put America first. Some considered this scandalous, but I wrote at the time that it sounded like the president’s job description. I can’t explain why some of Trump’s predecessors did not see fit to put our interests first, but he obviously does.
Meanwhile, the predicted ill-effects of the president’s tariff policies have not yet materialized:
There has been a near universal agreement among the economics profession that tariffs will raise inflation for American consumers and hurt the economy through delayed investment, slowing jobs growth and supply chain disruption.
This is still the most likely outcome, but the last few months have shown that the tariff “hit” that the Europeans and markets were banking on to make Trump “chicken out” hasn’t materialised.
The stark absence of tariff-induced inflation or a sharp drop off in economic growth in data releases since April has emboldened Trump in his assault against his trading partners and the US Federal Reserve.
It scuppered the Europeans and the Japanese, and means stock markets are now rallying at the prospect of the highest effective US tariff rate in nearly a century.
The jury is still out, but at present Trump’s tariff policies are shaping up as a success. For America, anyway.
