Trump's Trade Triumph
The media and other Trump haters can’t seem to let themselves admit it, but President Donald Trump scored a big victory for the American economy on trade last week. Trump and the European Union reached a handshake deal that is designed to lower tariffs on both sides of the Atlantic. They agreed to shoot for zero tariffs. Sounds like freer and fairer trade to me.
The exact details are still a bit murky, but what we do know is that the EU has pledged to lower its tariffs and other trade barriers on American soybeans, oil and gas, pharmaceutical products and certain manufactured goods. Trump promised to suspend some of the auto and aluminum and steel tariffs that he was threatening to whack the eurozone with.
It gets better: The two sides also agreed in principle to find ways to combat “unfair trading practices, including intellectual property theft, forced technology transfers, industrial subsidies and distortions created by state owned enterprises,” according to a joint statement released by Trump and European Commission President Jean-Claude Juncker.
These are the very trade violations that Trump has been railing against. We don’t engage in these anti-trade activities; Europe, Japan and China do. Before Trump came on the scene, most nations denied that this cheating and stealing were even happening.
Any progress in ending these unfair trade practices is an indisputable victory for the United States. In 18 months, Trump accomplished something that no previous president of the last 30 years could.
Yet the spin from many of the pundits begins by opining that Trump was the one who blinked here. The Politico story headline was amazing: “Trump backs off new tariffs on EU in retreat from trade war.” Bloomberg also described the agreement as a “Trump retreat” and a “victory for the EU.”
Excuse me. Retreating and backing down is how you describe the losers in a fight. Trump won a first-round tko. It’s like saying Sonny Liston beat Muhammad Ali even though it was Liston sprawled on the tarp.
We have here more evidence that the American president is the master negotiator. In private meetings during the campaign, he often told me that he is not a protectionist and that he wants more trade but that it has to be fair. The objective of his tactics has always been to use the leverage of punitive tariffs to reverse foreign trade laws that discriminate against American companies and workers.
This is the key point: Trump’s tariffs are meant to force other countries to lower theirs. It’s a dangerous game, for sure, because it can risk a trade war escalation — as we are now seeing with China. But Trump has always believed that the United States has the upper hand because of our massive consumer market, and that our trading partners will be forced to capitulate sooner rather than later.
What is clear is that he has played the Europeans like a fiddle here. His threat of a 20 percent auto tariff scared the daylights out of the Germans. Those levies could cripple their already-struggling economy. The panic in Berlin is what drove the EU to the bargaining table.
Even more masterful was how Trump got the Europeans to agree to buy more American natural gas. At the start of the NATO summit back on July 11, Trump slammed Germany for a gas pipeline deal with Russia. He said this would make Europe “captive” to Moscow. The teetotalers were horrified by Trump’s “undiplomatic” outburst aimed at “one of America’s closest allies.” Yet here we are a few weeks later, and the Europeans have agreed to buy more American gas. Is it that hard to connect these dots?
I often disagree with Trump’s saber-rattling trade antics. But it’s getting harder all the time to find fault with the results.
We aren’t out of the trade-war fires yet — far from it. But if Trump can solidify this deal with the Germans, the French and the rest of the EU and get a Mexico free-trade deal signed, he can then isolate China as the bad actor on the world stage and force Beijing to stop its half-trillion dollars a year of cheating and stealing.
Do any of these things sound like the results of a president who is “retreating”?
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