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EU, Trump Come to an Agreement on Tariffs and Trade

EU, Trump Come to an Agreement on Tariffs and Trade

Wednesday “was a very big day for free and fair trade.”

https://www.youtube.com/watch?v=uzORDMXlFf4

President Donald Trump and European Commission President Jean-Claude Juncker announced that the two sides have agreed to terms to simmer down a potential trade war that is already taking place between China and America.

But let’s take a deep breath and look closer before we pop the champagne.

Juncker, Trump Talks

From ABC NEWS:

“We agreed today, first of all, to work together toward zero tariffs, zero nontariff barriers and zero subsidies on non-auto industrial goods,” Trump said during his remarks in the Rose Garden as he stood next European Commission President Jean-Claude Juncker. “We will also work to reduce barriers and increase trade and services, chemicals, pharmaceuticals, medical products as well as soybeans. Soybeans is a big deal. And the European Union is going to start almost immediately to buy a lot of soybeans.”

Trump also indicated that the U.S. will enable the European Union to import more liquefied natural gas from the United States and the creation of a dialogue on standards meant to reduce barriers to trade. As part of the agreement, the U.S. will move to end some of the retaliatory tariffs relating to steel and aluminum.

“We also will resolve the steel and aluminum tariff issues and we will resolve retaliatory tariffs. We have some tariffs that are retaliatory and that will get resolved as part of what we are doing,” Trump said.

Juncker said the EU will delay any future tariffs as the bloc works with America on trade.

The biggest news out of this has to be soybeans, which has caused a headache for the administration and farmers. Trump approved tariffs valued about $50 billion on products from China like electronic goods and machinery. He also passed 10% tariffs on aluminum and 25% tariffs on steel from Canada, EU, and Mexico.

China responded with tariffs on over $34 billion on American products, which include agriculture products. Those Chinese tariffs forced the administration to prepare a plan to provide $21 billion in aid to farmers.

Now it looks like the EU will buy “‘a lot of soybeans’ in the coming weeks as a goodwill gesture in their ongoing trade talks.” Yet:

Trump said that Wednesday “was a very big day for free and fair trade.”

Juncker told Politico’s Brussels Playbook that the two men “get along well, surprisingly,” which helped the meeting between them. He noted that the president “appreciates that I challenged him twice at G7 meetings, hard at it but polite in tone. He doesn’t like those who beat around the bush.”

Analysis

This appears to be a win for Trump trade policy, but actions do speak louder than words. That’s all this meeting was…words. We need to see some action before I celebrate.  I still don’t like the idea of using tariffs as a negotiating tool because of the risk. China called our bluff and look what happened. I’m not the only one:

CATO’s Scott Lincicome (you should follow him on Twitter) offered his analysis on this deal to Haley Byrd at The Weekly Standard. There are seven points in the article, but I found the last one most intriguing:

“On the bright side, there is a clear de-escalation of rhetoric and that’s good, but the devil will be in the details,” Scott Lincicome, a trade lawyer and adjunct scholar at the libertarian Cato Institute, says. “And this provides almost no details. Meanwhile, all the tariffs implemented so far remain in force.”

(7) “We also want to resolve the steel and aluminum tariff issues and retaliatory tariffs.”

So, the steel and aluminum tariffs, and those the E.U. imposed on American industries in response, remain in place, even though the parties want to resolve the tariffs. (“Well, I want a Porsche,” Lincicome responds. “And a pony.”)

On this point, he observes that the statement makes no mention of national security in relation to steel and aluminum imports. Trump used Section 232 of the Trade Expansion Act in the spring to impose tariffs of 25 percent and 10 percent on those products, claiming they represent a threat to the United States. The fact that Wednesday’s joint statement indicates the steel and aluminum tariffs could be removed in response to developments completely unrelated to national security issues adds to a growing pile of evidence that the White House’s official justification for the tariffs is simply a pretense.

Lincicome concluded that the agreement between Juncker and Trump “represents ‘a step backwards in terms of ambition’ from the Transatlantic Trade and Investment Partnership, a bilateral effort that was largely abandoned when Trump took office.”

Lincicome stressed that Trump “could have actually achieved far broader liberalization had he just vigorously committed to picking up the T-TIP baton 18 months ago.” If Trump did this, America could have “avoided all sorts of economic and diplomatic headaches caused bu his own national security tariffs.”

Bloomberg reported what investors said about the meeting:

Commerzbank: “Does that mean the market can breathe a sigh of relief as the trade war is over? I am skeptical and fear that this is also a question of political calculation. It is positive that no new tariffs between the EU and the U.S. are going to be imposed despite the fact that the EU will maintain its 10% tariffs on U.S. cars which was a thorn in Trump’s side and that the EU and U.S. want to work on reducing existing trade restrictions. However, I can hardly imagine that the issue has been solved thanks to a few EU imports of soy beans and liquid gas.”

Sylvain Goyon, head of strategy at Oddo & Cie: While the initial reaction for risky assets is positive, no effective decision has been taken and the negotiation process has just started. He adds that “volatility linked to this topic is here to stay” and “differences” over auto and car parts aren’t resolved yet, while the steel and aluminum tariffs are still ongoing. The outcome is “an encouraging sign” that needs to be confirmed by some similar decisions on U.S./China, which seems unlikely in the short term.

Evercore ISIS: Developments are “a strong short-term market positive” though remaining alert “to the non-trivial possibility that negotiations fall apart.” On the auto front, this is a very positive while noting that first comments were “non-auto industrials” and broad bilateral agreements can take years. No immediate EU/U.S. tariffs is “a good thing” with the market pricing in 50%-60% probability of trade-war in autos as of yesterday. “All negative earnings aside, we would expect the broad sector to bounce today given negative positioning.”

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Comments

But, tariffs just don’t work! Just ask Flake, Corker, McStains, Sasse, Burr and the rest of the RINO wing of the GOP.

    notamemberofanyorganizedpolicital in reply to Dave. | July 26, 2018 at 2:14 pm

    Since when have they worked a “tariff?”

    Same goes for the lyin’ Media Monkeys…….

    Coolpapa in reply to Dave. | July 26, 2018 at 2:44 pm

    Don’t forget Rags.

    Ragspierre in reply to Dave. | July 26, 2018 at 3:41 pm

    No. Tariffs work wonderfully. Just ask any American manufacturer that uses steel and/or aluminum. Just ask any American farmer or rancher.

    They’ve damaged the American economy. They have or will cost every American consumer.

    They most certainly DO work.

    Plus, they’re an affront to liberty.

      Barry in reply to Ragspierre. | July 26, 2018 at 5:51 pm

      “They’ve damaged the American economy.”

      LOL, sure. Our economy is in the dumps since Trumps election.

      You have to be completely deranged to keep on spouting complete nonsense in the face of evidence everyone else can see – and feel.

      “Just ask any American manufacturer that uses steel and/or aluminum. Just ask any American farmer or rancher.”

      I qualify as an “any” America manufacturer and you are flat out wrong. No surprise there. Our business is up, so are our customers. Investment is occurring in our industry that has not been happening in the last 10-15 years.

      To be blunt, you’re completely wrong. Intelligent people recognize when they are wrong and acknowledge the truth.

      Mac45 in reply to Ragspierre. | July 26, 2018 at 7:12 pm

      “No. Tariffs work wonderfully. Just ask any American manufacturer that uses steel and/or aluminum. Just ask any American farmer or rancher.”

      Wait a minute here. Just last month you were arguing that tariffs would raise the cost of the goods that consumers buy, because the raw materials would cost more. But, if agricultural products are sold in the US, rather than abroad, wouldn’t this create a surfeit of goods here which would reduce food costs for consumers? And, as transport costs would be reduced, this should further reduce domestic food prices. Isn’t this what you want, lower prices for consumers? Now, it seems, you are more concerned about the PRODUCERS, manufacturers, than you are the end consumer. I’m confused.

        Ragspierre in reply to Mac45. | July 26, 2018 at 8:38 pm

        Yes, you are. Usually.

          In time you will know what it’s like to lose. To feel so desperately that you are right, but to fail all the same. Dread it, run from it, Destiny still arrives…

          (snap)

          I don’t fault people for being wrong, everyone makes mistakes. But you were so obnoxious in your certainty. Like those who assured us Trump couldn’t win, Hillary at 90% odds.

          But could you at least lower the hubris down a few notches. Humility is in order. Same pattern – NeverTrumpers are such sore losers.

          Ragspierre in reply to Ragspierre. | July 26, 2018 at 9:50 pm

          Noting that Mac.22 is usually confused (and specifically here) isn’t hubristic. That’s one of the many terms you don’t understand or use correctly.

          For one thing, what he asserts is just false. Tariffs will hurt consumers and producers, as I stated above. The dictatorial stupid Bernie Sanders policies imposed by Duh Donald already are. They ripple through the entire economy.

          People won’t take your criticisms of Trump seriously if you don’t admit when your analysis was wrong. Try it, you’re not going to lose face. Quite the opposite in fact.

          Mac45 in reply to Ragspierre. | July 27, 2018 at 12:06 am

          Fen, you have to understand Rags. What he did there was to completely ignore my entire post and then attempted to use my sarcastic final sentence to one up me. however, all that he succeeded in doing was looking the fool. His quip was analogous to saying, “Oh, Yeah?”. He offered no logical or even rebuttal. In other words, he completely failed, or more likely refused, to provide any. This makes it seem as though he can not rebut my remarks and, thereby, he belittles his whole attempted point.

          When you are unable to effectively attack a man’s point of view, then you are left with nothing but to attack the man.

          Ragspierre in reply to Ragspierre. | July 27, 2018 at 9:09 am

          But your POV…such as it was…was to try to paint my position in false terms.

          Tariffs hurt EVERYONE…even, paradoxically, their specially benefitted crony businesses. All history of protective tariffs teaches that the protected businesses tend to get fat, happy and stupid out of the rigors of competition. Inevitably, the protections are withdrawn, and the formerly protected sometimes don’t make the cut. If they do, it’s only with considerable pain.

          You don’t understand economics at all. Yet, as usual, you bloviate and attack. I just won’t stand by for your stupid and dishonesty.

“This is the most significant moment of Trump’s presidency since the tax law passed — and he’s had plenty, more than any president of any of our lifetimes if you actually think about it”

Well golly gee, Andy. All them there experts were wrong again. And here they kept going on and on about there superior intellect and how we just didn’t understand and should mind our own business.

“The Dems and their media lackeys are not going to have the tariff issue to kick around anymore. Turns out it was what anyone with the proverbial IQ in triple digits knew it was — a bargaining chip._

Well go figure Andy, it was a bargaining chip just like you said it was. Now here comes the part where we do not say we told you so. Or rub their noses in it. Or serve them up some nice hot crow. No siree we won’t gloat. Why do you know what Aunt-

You’re scaring the fish Barney. Mind your line.

https://pjmedia.com/rogerlsimon/trumps-deal-with-the-eu-is-democrat-nightmare/

It’s a start.

China was for tariffs before it was against them. China applies both explicit and implicit (e.g. labor and environmental arbitrage) tariffs on imported goods, as well as indulges other anti-competitive practices including coercion and theft. This has been good for profits, and bad for people and the environment in both nations. As for Europe, America and Europeans nations have regulatory parity, which should disqualify any need for tariffs to realize equitable trade and native sustainability.

buckeyeminuteman | July 26, 2018 at 1:47 pm

Who is this Juncker guy? No citizens of any EU-member nation voted for him, and yet he is the big guy running Europe. The people of Europe need their 1776 moment. And fast!

UnCivilServant | July 26, 2018 at 1:51 pm

the European Union is going to start almost immediately to buy a lot of soybeans

I think the European Union already has too much soy. We don’t need to be an enabler.

Go to the link below at the 8:00 minutes mark and hear what the Chinese told Trump. (The whole thing isn’t too bad – the interviewer won’t shut up, but tariff talk begins about there) They, the Chinese, put on tariffs put tariffs in place years ago and no one did anything. They raised them and no one did anything. They raised them again, and again, and still no one did anything…until you (Trump) came along. We, the Chinese, had no one to talk to, as far back as the Bush administration. Listen to it.

The left’s view of the world is that it’s not a war until someone fights back, then the one who fought back started the war.

https://www.nysun.com/

And liberals wept

Close The Fed | July 26, 2018 at 5:45 pm

I would sneer at all the caterwauling about tariffs by the peanut gallery, except their behavior kills Trump’s elbow room to maneuver. Take Ryan for example. Ryan’s been in govt employment for basically his entire adult life. Aside from his house and his cars, what’s the largest deal he ever negotiated USING HIS OWN MONEY?

Trump’s dealing with people, particularly in China, that don’t have our western bad habit of self-flagellation. They want to get in there and get THE BEST deal for themselves, regardless of HOW they get it. Steal? Sure! Limit ownership? Of course! Tariffs? Pffft! As high was we can make them!

So if the pantywaists would shut up and let my president do what I hired him for, I’d really appreciate it. And the think tank types who let America be absolutely drained of manufacturing, all the while collecting their paychecks from the think tanks, excuse me if I don’t even want to READ what you have to say. You sold your fellow Americans down the river, and didn’t even have the decency to re-evaulate your theories when you could PLAINLY see they were hurting terribly your fellow Americans.

KMA!!!!

    “You sold your fellow Americans down the river, and didn’t even have the decency to re-evaulate your theories when you could PLAINLY see they were hurting terribly your fellow Americans.”

    This. They did, and continue to do so.

    Ragspierre in reply to Close The Fed. | July 27, 2018 at 9:41 am

    “And the think tank types who let America be absolutely drained of manufacturing, all the while collecting their paychecks…”

    This is an obdurate and pernicious flucking lie.

    Did “you” “hire” “your president” to employ the trade policy of the AFL-CIO and Bernie Sanders?

    In your case, I’d say you are whacked out enough to have done just that.

    My bet is Ryan didn’t even have any of his money at risk in his house deal. He married a multi-millionaires daughter and if there is a loan on the property my bet is that the lender is a member of the US Chamber of Commerce and the UNRECORDED papers would show that he got a substantially better deal than anyone else.

      Ragspierre in reply to Bill2. | July 27, 2018 at 4:48 pm

      Other than being gross, slimy innuendo, WTF had this to do with tariffs imposed by a moron dicking with an entire economy on his whim?

Near as I can see, there are four POVs represented here, at least two of which are T-rumpian.

1. Tariffs are “GREAT”. (Quoting T-rump, who says a lot of shit)

2. Free trade is good and we want market trades, BUT tariffs…and we’re striving for that free trade thingy by imposing taxes on our own people because it’s…T-rump. (Also T-rump…but he says lots of shit)

3. International trade is inherently bad and hurts the U.S. (a position a few real gonzo nutters here hold, Mac.22). We should produce everything domestically.

4. Tariffs are terrible economics and an affront to liberty.

These are not reconcilable.

    Barry in reply to Ragspierre. | July 27, 2018 at 9:07 pm

    The greatest country that ever existed, the country with an abundance of liberty, has always had tariffs.

    Trump is using the tariffs as a tool, plain for those with a smidgen of common sense to see, to get to a true free trade position among countries. He believes, as I do, that if free trade actually flourishes, Americans will be winners, as will our trading partners.

    Being suckers, getting sold out by conmen spouting dogma that has no historical basis, has gotten us nowhere while making potential, if not outright, enemies wealthy enough to build a military that can threaten a large part of the world.

      Ragspierre in reply to Barry. | July 27, 2018 at 11:44 pm

      So, to clarify, T-rump sucking cultist…

      Protectionist tariffs: good or bad?

      Freedom of choice: dogma or not?

      Protection of crony businesses: historically swell or not?

        Barry in reply to Ragspierre. | July 27, 2018 at 11:59 pm

        So, to clarify, deranged neverTrump sucking cultist…

        We had tariffs throughout our history and thrived, becoming the worlds richest and most free nation. That is a simple fact. I believe zero tariffs would be even better, between trading countries. You will not get that if you practice conman concluded sucker trade.

        You have freedom of choice now. You pay taxes now, on damn near everything. See statement above.

        Outsourcing our military hardware production, swell or not?

          Ragspierre in reply to Barry. | July 28, 2018 at 12:14 am

          I see, as always, you can’t answer simple questions.

          “We had tariffs throughout our history and thrived, becoming the worlds richest and most free nation. That is a simple fact.”

          Were they protectionist tariffs or were they based on revenue generation, liar?

          Did protectionist tariffs ever work as advertised, liar?

          Americans don’t have freedom of choice on something as simple as what washing machine to buy, do they, liar?

          Barry in reply to Barry. | July 28, 2018 at 12:42 am

          I answered the question. The answers show you to be a fool, so you don’t like them.

          “Were they protectionist tariffs or were they based on revenue generation, liar?”

          So, the effect of a tariff is different if we call it revenue generation? Yea, explain that. I know you’ll spout some bafflegab that everyone else can see through. Go cast a vote for a Bush, again. Did you rail long and loud when there were tariffs under the Bush administration(s)? No.

          Facts are just facts and you can’t make argument. We have always had tariffs, and we grew and prospered in spite of it.

          Trump derangement syndrome. get help.

          Ragspierre in reply to Barry. | July 28, 2018 at 12:46 am

          So, to clarify, T-rump sucking cultist…

          Protectionist tariffs: good or bad?

          Freedom of choice: dogma or not?

          Protection of crony businesses: historically swell or not?

          You didn’t answer the questions, you lying Prog.

          YES! The INTENT of a tariff is essential, you lying POS.

          Barry in reply to Barry. | July 28, 2018 at 11:08 pm

          So, to clarify, deranged sucking neverTrump cultist…

          I already answered your questions. You’re just not bright enough to understand reality.

          And I’ll note, you can’t answer the question of how the USA became the richest nation on earth with the most freedom ever seen by man, all while having substantial tariffs.
          You can’t. You won’t. You only try to pretend that the motive for the tariffs somehow changes the outcome.

          Ragspierre in reply to Barry. | July 29, 2018 at 3:27 am

          Of course you haven’t answered my questions, liar. You’re an intellectual coward who can’t deal in the truth.

          Of course I can easily deal with yours. Protectionist tariffs have done enormous damage to our nation and its people. We’ve managed to thrive DESPITE your progressive bullshit.

          https://www.theatlantic.com/politics/archive/2018/07/when-trump-country-turns-against-tariffs/566084/

          That’s a pretty good history of your collectivist wet dream, shared by you and Bernie Sanders. Of course, it’s anti-liberty, like your little yellow god.

          And NATURALLY the intent of a tariff is essential. A two or three percent tariff on all imports is COMPLETELY different than a 25% tariff on steel, you moron.

VaGentleman | July 28, 2018 at 5:14 am

Why don’t free trade absolutists ever discuss the free movement of labor across borders?

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