President Trump’s one-sided trade deal that he just imposed on the European Union has caused a lot of anger and despair on the other side of the Atlantic Ocean. Ursula von der Leyen, the President of the European Commission, was compelled to make trade concessions that come across as near-total capitulation to Trump’s terms. She had no choice. This was necessary so as to not to cost the 27-nation EU a greater loss of access to the enormous American market.
How one-sided is it?• Tariffs on most products being imported to the US from Europe will increase from about 1% to 15%.
• Tariffs on vehicles being imported to the U.S. will increase from 2.5% to 15%. The short-term impact of this will be more tariff revenue for the U.S., which will be eaten by European manufacturers if they want to sell their cars here. The long-term impact of this will be the movement of European car manufacturing to the US, bringing manufacturing jobs to the US, and costing the EU jobs.
• The 50% tariff that Trump imposed on steel, aluminum, and copper imports will remain in place.
• The EU will roughly double the amount of US energy that it imports, to about $750 billion per year.
• European manufacturers will commit to $600 billion in capital expenditures for industrial development in the US.
• The EU will eliminate tariffs on products exported from the US to Europe.This is a staggering reversal of the unfair trade practices that existed before – trade practices that helped crush American manufacturing, but were celebrated by “Principled Free Traders” who rejoiced at every American job lost to “free trade.”
Of course, what existed before wasn’t “free trade” at all, it was unilateral surrender to foreign mercantilism. However, the Principled Free Traders repeatedly told us that surrendering to non-reciprocal, one-sided trade was a beautiful thing because:
- American consumers get lower prices! The free traders didn’t even care if the lower-cost of imports was due to price-supports from unfriendly foreign governments.
- Trade that eliminates American manufacturing jobs allows American labor to be better deployed to “thinking” jobs rather than to manual labor.
- Tariffs are a tax on consumers. If the US had imposed counter-tariffs, that would have been a “tax on consumers.”
- A utopian global economy requires an upfront American capitulation to set the example of how other countries should behave in a libertarian world without economic borders.
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