XPost: alt.fan.rush-limbaugh, alt.atheism, alt.politics.trump   
   XPost: rec.arts.tv, can.politics   
   From: x@y.com   
      
   Paul Krugman   
   I Coulda Made a Better Deal   
   What, exactly, did Trump get from Europe?   
      
   https://paulkrugman.substack.com/p/i-coulda-made-a-better-deal   
      
   Trump has now announced a trade “deal” with the European Union that   
   looks a lot like the “deal” he made with Japan. I use scare quotes   
   because there is little sign of a quid pro quo. The United States is   
   imposing a 15 percent tariff that is lower than previously threatened,   
   but still vastly higher than we had before Trump. Overall U.S. tariffs   
   seem likely to settle roughly at the level that prevailed after the   
   infamous Smoot-Hawley tariff of 1930.   
      
   In return we got a vague promise of higher European investment in the   
   United States. When Japan made a similar promise last week,   
   administration officials asserted that this would mean hundreds of   
   billions flowing into rebuilding U.S. industry. Japanese officials,   
   however, say that the money will consist almost entirely of loans and   
   loan guarantees. This strongly suggests that Japan will, if it does   
   anything at all, simply be sticking Trump’s name on money flows that   
   would have happened anyway. There’s every reason to suspect that the   
   same will be true of whatever the EU does.   
      
   And like the Japan deal, this deal seems to place lower tariffs on cars   
   made in Europe, which have very little U.S. content, than on cars made   
   in Canada, which contain many American parts. Add in the punishing   
   tariffs on steel and aluminum, and Trump’s trade policy seems, if   
   anything, to be tilting the playing field against U.S. manufacturing.   
      
   When I point out that Trump’s idea of trade deals seems   
   counterproductive even in terms of his claimed goal of boosting   
   manufacturing, I get some pushback from readers along these lines: “Oh,   
   yeah? If you’re such an expert on trade negotiations, tell me what deal   
   you think you could have made.”   
      
   OK, I can answer that. If I had been in charge of negotiating with the   
   European Union, I would have been able to get a deal with the following   
   components:   
      
   · Very low tariffs on U.S. exports of manufactured goods to Europe, on   
   the order of 1 percent   
      
   · Near balance in bilateral trade, with U.S. exports to Europe close to   
   90 percent of our imports from Europe   
      
   · U.S. companies allowed to operate freely in Europe, earning hundreds   
   of billions a year in profits   
      
   · European corporations investing more than $150 billion a year — real   
   investment, not loans — in the United States   
      
   Why do I believe that I could have negotiated a deal like that? Because   
   that’s what U.S.-EU international transactions actually looked like in   
   2024. So that’s what we could have gotten by doing nothing.   
      
   Before Trump returned to power, U.S. nonagricultural exports to the EU   
   faced an average tariff rate — that’s the number “MFN AVG of traded TL”   
   in this table — of 1 percent. As for U.S. transactions with Europe, they   
   looked like this:   
      
   Source: Bureau of Economic Analysis   
      
   If the trade imbalance looks smaller than the numbers you may have   
   heard, that’s because Trump likes to talk about trade balances in goods,   
   but ignores the fact that America runs a substantial trade surplus in   
   services. If you include both goods and services — and why wouldn’t you?   
   — U.S.-Europe trade is fairly close to balance.   
      
   But if the US-EU trade relationship was more or less OK last year, why   
   did Trump impose huge tariffs and leave many of them in place even after   
   the so-called deal? Because he felt like it. You won’t get anywhere in   
   understanding the trade war if you insist on believing that Trump’s   
   tariffs are a response to any legitimate grievances. And he failed to   
   gain any significant concessions, mainly because Europe was already   
   behaving well and had nothing to concede.   
      
   So was the US-EU trade deal basically a nothingburger? (Substitute some   
   European food for burger, if you like.) No, it was a bad thing, but   
   mainly for political reasons.   
      
   1. Trump probably believes he won, which will just encourage him to   
   persist with his trade war.   
      
   2. This will hurt the world economy, with the burden falling mainly on   
   lower-income Americans. The Yale Budget Lab estimates that Trump’s   
   tariffs will leave the U.S. economy 0.4 percent poorer in the long run,   
   which is very close to my own back-of-the-envelope calculations. But the   
   tariffs are basically a sales tax that will reduce real income for poor   
   and working-class families by about 1.5 percent, even as cuts in other   
   taxes raise income for the wealthy.   
      
   3. European negotiators didn’t make many substantive concessions, but   
   they pretended to give ground — and they didn’t retaliate, even though   
   they were clearly entitled to do so, because the U.S. has just gone back   
   on all its solemn past agreements. This makes the EU look weak, which is   
   a bad omen for its ability to deal with real challenges, starting with   
   helping Ukraine.   
      
   Two less discouraging aspects of what just happened: First, Trump   
   appears to have backed down on the idea of treating European value-added   
   taxes as an unfair barrier to U.S. exports (which they aren’t, but facts   
   don’t matter here.) So that’s one potentially awful confrontation   
   avoided, at least for now.   
      
   Second, if this trade deal was in part an attempt to drive Epstein from   
   the top of the news, my sense of the news flow is that it has been a   
   complete flop.   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)