One side is dragged kicking and squealing to the table, and the resulting deal sees both sides losing. In the case of Canada and Mexico, their turn to have the thumbscrews applied came after Trump reneged on two earlier official FTAs, the last of which he had negotiated.
Not only that, Trump’s deals follow a few hours of negotiating and amount to not much more than a vague outline, but even the very basic heads of agreement are way beyond Trump’s mental processing capacity, and his ability to understand anything.
The recent EU-US ‘deal’ is a prime example. The deal has been spun as a big defeat for the EU, but that may not be true. It appears that Brussels has outmaneuvered Trump and Howard Lutnick, his Commerce Secretary.
The White House spun it as a “colossal deal” that “will enable U.S. farmers, ranchers, fishermen, and manufacturers to increase U.S. exports, expand business opportunities, and help reduce the goods trade deficit with the European Union.” The official announcement came in a 'fact sheet' published on Monday on the WH website. The use of the phrase 'fact sheet' might raise a hollow laugh in some quarters, given the president's predilection for lies and misinformation.
It is, in fact, not a 'colossal deal' at all. Euronews reports that the EU Commission has briefed journalists on the 'details' - such as they are - and it’s quite apparent the two sides see it completely differently. What we tend to forget is that Trump needed a deal almost as badly as the EU. He was desperate to have something, anything, to 'sell' to his base. Far more work needs to be done over the coming months and years to iron out the details, and Trump may not even be president.
Contrary to WH claims, pharmaceuticals will not be subject to the across-the-board 15% tariff. Drugs will remain under the current 0% rate until the Trump administration completes its Section 232 investigation into the sector. "There will be no tariffs on pharmaceuticals this Friday," a senior official said.
On energy, the EU will not be buying US energy exports amounting to $750 billion by the end of Trump's second term. In practice, this will amount to about $250 billion each year maximum. A spokesman said:
"It's important to remember that the European Commission is not buying any of these commodities and neither is the US government selling any of this. These are all commercial decisions made by the companies: those companies that buy and those companies that sell."
Neither will the bloc be investing $600 billion in the US by the end of 2028. As with energy purchases, the Commission says it is unable to design and implement investments on behalf of the private sector. The $600 billion is another aspiration based on contacts with industry and was probably in the pipeline anyway.
"It's not something the EU, as a public authority, can guarantee – it's something based on the intention of private companies," a senior official said. The $600 billion figure could shrink once the impact of the EU-US trade deal, which is disadvantageous for the bloc, begins to take effect.
The WH fact sheet also claims the EU has "agreed to purchase significant amounts of US military equipment." But the Commission flatly denies making any pledge to increase purchases of American-made weaponry. "Arms procurement is not a matter for the Commission," the senior official said.
On food standards, a thorny issue on both sides of the Atlantic, the US administration thinks they have secured a deal that will see the US and the EU address "non-tariff barriers" in food and agricultural trade, including "streamlining requirements for sanitary certificates for US pork and dairy products."
Not so, according to Brussels. Yes, the EU is willing to streamline SPS certification, but that's as far as it goes. The EU's Commissioner for Trade Olof Gill said the bloc will retain its "right to regulate autonomously" at all stages. He says, "We're not moving on our regulations. We're not moving on our rules. We're not moving on the system that we built up over many decades that our citizens trust."
"That will not form part of this agreement with the US," he added.
You wonder if the two sides were ever in the same room.
The fact sheet ends with this:
"President Trump continues to advance the economic and national security interests of the American people by removing tariff and non-tariff barriers and expanding market access for American exporters."
"Today’s announcement opens up historic market access to the second largest economy in the world, reestablishing the strong positive long-term relationship between the United States and its key ally the European Union."
The WH statement says Trump is "Liberating America from unfair trade practices" and has "challenged the assumption that American workers and businesses must tolerate unfair trade practices that have disadvantaged them for decades and contributed to our historic trade deficit."
He is, of course, doing the opposite, and adding $billions to the costs of US consumers.
On April 2, Trump declared a "national emergency" in response to the large and persistent US goods trade deficit, claiming it was caused by "a lack of reciprocity in our bilateral trade relationships, unfair tariff and non-tariff barriers, and US trading partners’ economic policies that suppress domestic wages and consumption."
This is, I'm afraid, just nonsense.
The sorry truth is that Europe doesn't want American cars, trucks, food, or other products because they're usually too expensive (even before any tariffs are applied) and of questionable quality. For decades, US consumers have voted with their pockets and chosen European (and Asian) goods over domestic manufacturers. Nobody forced them to buy imported stuff; they freely chose to do so without any pressure. They did it because the price and quality were better.
Instead of responding by improving quality and lowering costs, American companies simply kept focusing on bottom-line profits and shareholder dividends, hollowing out their own industrial base and refusing to invest in the innovation and equipment needed to compete. Trump's trade policies do nothing to address that.
America is very good at developing the industries of the future, but forget we (and they) also need the old industries of the past, like agriculture, transport, industrial automation, manufacturing, household goods, and so on. Others have now overtaken them, leaving the US trailing in the dust.
I don't think European consumers want to have American beef or chicken adulterated with chemicals and hormones at any price. Exporters have to comply with US standards if they want to sell into America, which, in most cases, they can do easily because EU standards are higher. The problem with the US is that its food producers don't want to offer higher standards and in the area of industrial and consumer products, America doesn't actually produce the things that Europeans want or need.
When Trump is gone, America's problems will still be there, only much, much worse than before.
