Trump Is Getting Desired Results From Tariffs
Art of the deal: The EU agrees to work toward freer and fairer trade with America.
Wednesday saw an example of what is widely touted as President Donald Trump’s greatest strength — negotiating a good deal. Following his meeting with European Commission President Jean-Claude Juncker and his top trade official, Cecilia Malmström, Trump announced an agreement that effectively avoids a trade war. “This was a very big day for free and fair trade,” Trump stated. “Over the years, the United States has lost hundreds of billions of dollars to the European Union and we just want it to be a level playing field for our farmers, our manufacturers, [and] for everybody.”
Juncker also expressed a positive conciliatory note after previously having threatened retaliatory measures for Trump’s proposed 25% automobile tariff on all European imports. He noted, “We are close partners — allies, not enemies. We have to work together.”
News of the agreement sent the markets jumping in relief.
Trump’s repeated talk of zero tariffs and fair trade seems to have encouraged good-faith negotiations and the recognition that the current state of trade is not the level playing field it needs to be. With this initial agreement, the EU will import more U.S. soybeans and liquid natural gas. It’s important to note that the deal on natural gas directly challenges Vladimir Putin by reducing Europe’s reliance on Russian energy.
Juncker also agreed to pursue badly needed reforms at the World Trade Organization, as Trump has long argued that WTO judges are biased against the U.S. Further, the EU will work to align its regulatory standards to allow for a better and fairer market within Europe for U.S. medical devices. And finally, both Trump and Juncker made a commitment to work toward an eventual zero-tariff trade deal. “The United States and the European Union together count more than 830 million citizens and more than 50 percent of global GDP,” a joint statement noted. “If we team up, we can make our planet a better, more secure, and more prosperous place.”
Through this latest deal, Trump has deftly set pieces in place and strengthened his hand, effectively ratcheting up pressure on China to come to the negotiation table. There are also positive signs coming out of Mexico as the newly elected president’s chief trade negotiator, Jesus Seade, indicated on Tuesday that Mexico is open to a new deal: “What I see … to be a very feasible expectation is that we’ll be concluding negotiation in the next two months if possible, or in the next few months a bit further down the road.” He added, “President Trump has a very personal style. He likes to appear chaotic. But the last thing he is is chaotic. I think he’s a very intelligent man.”
Clearly, Trump’s tariff gamble is paying off, and despite wide criticism from both sides of the political aisle, he has steadily maintained the course and is starting to get the results he has been after the whole time — a fair and level playing field for American workers and businesses. Trump’s moves to achieve fair and free trade are actually reminiscent of Ronald Reagan’s strategy to force the Soviet Union to the negotiation table via a nuclear arms race — seemingly counterintuitive but effective.