Trump has made a considerable number of trade threats only to eventually back down. Will it play out that way again?
For a number of reasons, I think Trump will act this time. First, let’s look at the threats.
Severe Pain
On February 25, Trump told the EU Play Ball or ‘We’re Going to Tariff the Hell Out of You’
“The European Union is very, very tough. Very, very tough. They don’t allow our products in. They don’t allow our farming goods in,” Trump said at a meeting with U.S. governors, according to a transcript from the White House. He added that “maybe, in certain ways,” the EU is “tougher than China.”
On March 14, Trump Warned EU of ‘Severe’ Economic Pain if No Progress On Trade Talks.
Partial Agreement Won’t Fly
On April 15, Reuters reported EU Ready to Launch U.S. Trade Talks, but Without Agriculture.
The EU approved two areas for negotiation, opposed by France with an abstention from Belgium. But agriculture was not included, leaving the 28-country bloc at odds with Washington, which has insisted on including farm products in the talks.
EU trade agreement are unanimous. Tiny countries can and have influenced outcomes. It took over a decade to get an agreement with Canada over concerns of tiny nations.
Even if US-EU trade talks take place, nothing will come of them and Trump will quickly get frustrated.
Climate Change Now in the Picture
On April 18, France has signaled it will not cooperate with Trump in any way.
Please consider the new French demand: No EU-US Trade Talks Unless Trump Supports Climate Deal.
Earlier this week, the European Union agreed to start trade talks with the United States on industrial goods. France, however, has objected to the decision while Belgium abstained. In Paris, the concern is that there cannot be any agreement over trade while the U.S. refuses to commit to key environmental targets.
“France is opposed to the initiation of any trade negotiations with countries outside the Paris climate agreement,” a French official said Monday, explaining why the second largest euro country said no to trade negotiations with Washington.
“It is a question of values. Europe must be exemplary and firm in its defense of the climate,” the same official said.
Uri Dadush, a Washington-based scholar for the think tank Bruegel, told CNBC: “I believe France and others less prominently visible than France and which are net beneficiaries of the Common Agricultural Policy (Italy, Spain, for example) will veto discussion of agriculture trade reforms.”
“This will make it even tougher for the U.S. to accept a deal, and I suspect that President Trump was not adequately briefed or ignored his brief when he agreed with (European Commission) President Juncker to omit agriculture,” he added.
Trade Talks Going Nowhere
Even without the absurd demand on climate change, trade talks with the EU are going nowhere.
Not Just Trump Holding Up Talks
One difference this time is that it isn’t just Trump threatening the EU.
Via Eurointelligence:
It would be rather silly to report the EU Council’s decision to open limited trade talks with the US without noting the immediate cool response on the other side of the Atlantic. The first reaction did not come from Donald Trump – who was busy giving technical advice to French firefighters – but from Chuck Grassley, the chair of the US Senate’s finance committee. He immediately dismissed the decision by the EU Council to open up trade negotiations with the US, making it clear that no deal would pass the Senate without including agriculture.
Trade policy with Europe is not a matter where Congress and the White House are divided. It is our understanding that Trump’s closest advisers are all expecting the president to slap tariffs on European auto imports.
The French opposition, together with that expressed earlier by the European Parliament, does bot bode well for future EU adoption of even a limited trade deal with the US. The trade talks need only a qualified majority to be launched, but unanimity of member states and a majority in the EP to be ratified.
We have been observing a definite hardening of French positions in a variety of issues, including trade and the Brexit extension. Last week France blocked an EU statement on Libya. It will be interesting to see whether Emmanuel Macron’s readiness to assert himself more strongly will survive the European elections.
Grassley
Chuck Grassley, head of the Senate Finance Committee is from Iowa, an huge farm-belt state. Grassley will insist agriculture be part of any trade deal.
Trump will listen to Grassley and the trade hawks.
Chlorinated Chicken
Major Transatlantic Trade War Coming Up
Trump’s position is somewhat logical (if you foolishly believe tariffs are an answer).
The EU runs a massive trade surplus with the US in industrial goods. Eliminating tariffs on industrial goods would likely increase that surplus.
There is one tried and true way to get Trump to back down: Give in on some minor point then agree to buy more soybeans.
However, the EU is not going to buy more soybeans, GMO products in general, or chlorinated chicken.
Instead, Macron taunted Trump with a huge red flag issue regarding climate change.
Trade War in May
The Commerce Department presented a report on auto imports in mid-January. Supposedly, auto imports are a threat to US national security. That’s absurd, but it allows “tariff man” to do whatever he wants.
The deadline for Trump to make a decision on EU tariffs is mid-May.
Trump is set to sign a trade deal with China in late May or early June. Expect Trump to finalize a meaningless deal with China, then start a major trade war with the EU.
Mike “Mish” Shedlock
The global logistics chain in automobiles and parts is far more globalized than simple tariffs on end products encompass. Introducing tariffs will NOT generate the desired outcomes, but will only serve to pour sand in the gears of global production chains. The same applies to trade in general. The problems start way before any trade particulars in Trump’s “thinking”.
The EU has already offered to eliminate tariffs reciprocally (their tariffs on passenger cars introduced long ago to balance the much higher American import tariffs on light trucks). Seems a win-win, but Trump will not engage them on this. The very offer just underscores that those wily inscrutable Europeans are actually more Chinese than are people from China [!!]
President Trump intends to repatriate manufacturing. He has installed the most competitive tax rates for manufacturers. Americans need jobs. Germans do not need jobs. If Germans needed jobs they would finance NATO. Germans assemble automobiles in the USA. Now if they would like to sell those automobiles they can manufacture the engines, transmissions, and accessories in the USA. Let the Germans talk to the frogs about agriculture.
“President Trump intends to repatriate manufacturing.”
Just like his fellow Caudillos did in post war Latin America.
While their contemporaries in Hong Kong preferred abstaining from “intending” this or that about other people’s choices.
looks like the unsustainable planet destructive globalization madness we ve ‘enjoyed’ for almost 4 decades now, exponentially contributing to climate change and the undeniable undermining of the global financial system might be grinding to a halt at last …. hopefully ….
If globalization undermines “the global financial system,” then bring it on. The more, the merrier. The faster that racket is destroyed, by any means whatsoever, the better. As for the climate….. I know little children tend to have an outsized view of their, and their daddy’s, importance in the grand scheme of things…..
EU – The New USSR. Try negotiate with that. Good luck.
Sown, not sewn.
Yes thanks
Fixed
So let me get this “choice” straight.
Either agree to the “Paris Accords” which will strangle the American economy but let China and India escape any restraints.
or
Keep the massive out of balance of trade with the EU “as is” and with no improvements.
Easy solution.
Choose option 3. Tariff the hell out of the EU. Free trade with Russia and the UK post Brexit. Let the EU fund NATO.
Why do you club china and India together. Per capita CO2 foot print of US is 2 times of china and 12 times of India. And you still complain about those countries.
You dont have to go ape-shit libtard to talk about reducing CO2. But you can atleast talk about reducing it.
I know math is hard for some folks.
“China is key. It is by far the world’s biggest source of carbon emissions, producing more than one quarter of the global total and 81 percent more than the United States. The U.S. is the second-largest; India a distant third.
Unlike China, emissions from the United States have trended lower in recent years. The peak occurred in 2005; overall net emissions in 2016 were 12.1-percent lower than in 2005, and the International Energy Agency reports another drop in 2017.”
Now try the numbers in a per capita basis and get back to me. You are comparing apples to oranges and so is the Hill.. See when it comes to numbers there are multiple ways to “present” them. And yes curbing CO2 emissions will kill some industries while creating others. There will be winners and losers. Automation will eventually kill most manual manufacturing. BTW the fact that you think that the US can strike a “free” trade agreement with the UK after Brexit is well wishful thinking. And yeas the coal industry is destine to extinction because there are better ways.
Both blatant disregard for any curbs on consumption as well as runaway population growth in third world is contributing to gutting of the environment. Climate is just one aspect of turning the living planet into a dump.
“Choose option 3. Tariff the hell out of the EU.”
As long as everyone is free to choose, nothing particularly wrong with them choosing option 3. Just don’t run around trying to force others to do so as well.
“Free trade with Russia and the UK post Brexit.”
And everyone else.
“Let the EU fund NATO.”
If they want to. If not, oh well..
France’s stance on Paris Climate Accord is not “absurd”. The U.S. will have a competitive advantage if we can emit CO2 for free and the rest of the world cannot.
They are free to ditch their CO2 targets. They will never reach them anyway – the data indicate that the whole scheme is a huge scam. All that has so far happened is that electricity costs for consumers have soared into the blue yonder in many European nations, while CO2 emissions have just kept rising at precisely the same pace as before, with not even the slightest interruption detectable.
Right. Raising interest rates to a sustainable 5% would take care of CO2 emissions almost overnight, and let the chips fall where they may.
“France is opposed to the initiation of any trade negotiations with countries outside the Paris climate agreement,” a French official said…
“That is due to the significant amount of energy used in the mining and processing of lithium, cobalt, and manganese, which are critical raw materials for the production of electric car batteries.”
Sure because oil exploration, production and refining is taken into account when comparing electrical vs gas/diesel CO2 emissions. Whenever I see “zerohedge” I see lazy no DD
Here is a less “lazy” resource discussing electric vs. ICE:
Also, here is a 45 minute Youtube presentation from ViZn Energy Systems, a US-based company that makes utility-scale flow batteries. It looks like they have a great product and yet they ran out of money and closed their doors for 10 weeks in Q1 of 2018. They have partly reopened now, having made a deal with a Chinese energy company:
“Sure because oil exploration, production and refining is taken into account when comparing electrical vs gas/diesel CO2 emissions. Whenever I see “zerohedge” I see lazy no DD”
Actually, it is the carbon footprint of electric vehicles that is ignored by the media and EV promoters. They aren’t as green as advertised.
ZH is pointing out an inconvenient fact.
Typical dogmatic answer that does not address my comment. The article (ZH) does not compare apples to apples since it ignores what I mentioned. BTW how about the military spend (money, CO2 and lives) used to keep the oil industry “flowing”?
“Typical dogmatic answer that does not address my comment.”
The media is the one being typically dogmatic, as they ignore the fact that VE’s are3 not as green as advertised.
Good article that still fails to see efficiency gains year after year. Why is that a problem? Well think about this, gas powered cars have reach (as far as I can see) their miles per gallon peak. Batteries on the other hand are in their infancy. Do you expect batteries to get significantly better? I do. So to me the cost projections you be based on an assumed battery projected efficiency increase. In other words when gas cars were introduced their miles per gallon were pathetic now however, no so much. So I would expect the electric technology to follow a similar improvement curve. BTW just for the record I think that power generation should be nuclear (just not the type of reactors used today)
“Do you expect batteries to get significantly better? I do.”
Batteries are not a new technology. They are a very old technology. They are going to get slowly better, but unless there is a groundbreaking discovery there will probably not be any sudden improvements. They are not like computers in that way.
Battery are old technology? The concept of battery is indeed old (just like the concept of “car”). The chemistry of batteries (on the other hand) is evolving continuoslly. For instance: lithium-ion batteries were Invented in the late 1970s and early 1980s and start to commercialize in the 90’s. You seem to put batteries (regardless of the technology they use) in the same bucket and that is wrong. So a more accurate remark would be “lithium-ion battery is not new for instance. New materials have advance battery storage on a weight/per KW has steadily improve. Now you may be able to increase gas efficiency but only if there are mandated miles/per gallon (you all oppose because regulation=bad) or a shock in gas prices that forces a market change (and even on this I would expect people to consider electric more than gas).
“The chemistry of batteries (on the other hand) is evolving continuoslly.”
It is slowly and steadily evolving. ViZn Energy in the video I linked to below possibly has one of the cheapest utility scale battery storage systems available, and yet they are still having trouble making a go of it. I observe battery tech is a difficult slog for all those involved. Believe what you want.
“battery tech is a difficult slog” while I think that is true, I expect breakthroughs to come faster from “storage” technologies than from gas powered engines.
Not the first study on this topic, nor definitive. Everything depends the variables and assumptions you plug in. Including electricity from non-renewable sources is debatable, since many companies and individuals source their electricity from “green” providers. Simply scratching that as irrelevant makes the analysis “propaganda.” The assumptions about battery life and mileage to not correspond to what I know anecdotally (total miles on battery packs as old as 4-5 years far exceeds what is being advanced as battery pack life-time).
“Supposedly, auto imports are a threat to US national security. That’s absurd, but it allows “tariff man” to do whatever he wants.”
I agree. If anything, France has a better argument: Protecting agricultural goods is a real national security. I don’t know of any country that survives if they can’t feed its population. BTW this as old as history itself. An army marches on its stomach so said Napoleon (another mad narcissist)
Many of the countries in the world where people eat the best, don’t produce much of their own food at all.
Also, people feed themselves. Blocks on maps don’t do it for them. The best a “country” can do, is get out f the way, so that people living there can feed themselves as they best see fit, without interference.
Eating the best does not equal food security. Like I said a country that can not feed its people will fail in time.
“The best a “country” can do, is get out f the way, so that people living there can feed themselves as they best see fit, without interference.”
Last person that said something similar was Maduro (Venezuelan president) telling the people that all should have chickens and gardens where their live no to go hungry (are you a commie? LoL). Reality being the bitch that it is tells me that with large populations and an specialized industrial/service workforce you don’t get to play “farmer”. Industrial level food production is required.
If Venezuela is your idea of a place where the government just got out of the way, I don’t know what to say…..Your case me be terminal…
Nowhere where five year planners are in charge of feeding “their” people, has ever ended with anything other than shortages, shitty quality and starvation. And that will never change. Because it cannot change.
You really have a reading comprehension problem. I was pointing out that “so that people living there can feed themselves as they best see fit” does not scale to a national level and that Maduro tried, also, like you to tell people “so that people living there can feed themselves as they best see fit” and in his opinion it was raising chickens in their back yard.
I can plan half a year ahead when to buy a new car or TV (not that the plastic card addicted dupes would do that), but I cannot delay the time to eat by hardly a day. Which one is more important?