All Will Be Great!
Showing concern over mid-term elections, the Trump Administration Plans Up to $12 Billion in Farm Aid to Ease Concerns Over Trade Disputes.
The Trump administration on Tuesday announced an emergency-aid package of $12 billion for farmers amid growing concerns that the U.S. agricultural sector could suffer from President Donald Trump’s escalating trade dispute with some of America’s largest trading partners.
The trade rift between the U.S. and some of its closest allies has prompted retaliations and legal actions following President Trump’s decision earlier this year to impose tariffs of 10% on aluminum imports and 25% on steel imports from Canada, Mexico and the EU.
U.S. Agriculture Secretary Sonny Perdue said Tuesday the “one-time” program would help farmers meet losses resulting from “illegal retaliation” to U.S. tariffs, and wouldn’t require congressional approval.
Last week, Mr. Trump threatened “tremendous retribution” if his meeting with the EU officials this week doesn’t lead to what he considers to be a fair auto-trade deal. Mr. Trump said recently he considers the EU “a foe” on trade. Mr. Trump repeatedly complains that the EU imposes 10% tariffs on auto imports, compared with 2.5% imposed by the U.S. He declines to mention the 25% tariffs the U.S. imposes on light trucks, vs. the 10% rate in Europe.
Accurate Summation of Today's Trade News
Yesterday, I commented No Deal: Trump Offers Zero-Tariff Deal, EU Refuses
The Washington Times reported "EU Trade Commissioner Cecilia Malmstrom, who will accompany Mr. Juncker to Washington this week, said they will bring a new list of U.S. goods targeted for sanctions if Mr. Trump doesn’t back down."
I created the image yesterday using a Tareyton ad from 1960's and an image of Jean-Claude Juncker.
Negati Net Benefits
I like this Tweet from Pater Tenebrarum (Acting Man) posted in response to the above article.
I will change his comment slightly to "No net benefits" or more precisely "Negative net benefits". There may be small benefits to a protected class but at a greater expense to to population at large. I am certain Pater understands that.
It's an unsolvable problem.
- Because France will never give up its agricultural tariff policy.
- Bickering between France and Germany is on the rise. Germany is hurt far more than France over the auto squabble.
- This is not just a France-Germany issue. To make a treaty change, and tariffs are a treaty change, every nation in the EU must sign off on it. Re-read point number 1.
It took over a decade for the EU to negotiate a simple trade treaty with Canada. It nearly failed and took as long as it did because one country didn't like it.
Correction: I thought it passed when the Netherlands removed objections. The Italian election may have changed that verdict.
Reuters reports Italy won't ratify EU free-trade deal with Canada.
Here's the current situation. The EU signed the deal, but all 28 members must ratify it. The treaty is not valid until all 28 nations ratify it!
“We will not ratify the free-trade treaty with Canada because it protects only a small part of our PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) products,” Italian Minister Gian Marco Centinaio told the daily newspaper, La Stampa.
The government’s program pledged to “protect the highest-quality products of Made in Italy”.
Expect Out of Control Escalation
To expect Juncker will agree to remove all tariffs is like expecting vegans to suddenly condone baby back ribs.
Given the above, the most likely course of action is the trade war will escalate out of control.
- Trade War With China Morphs Into Currency War: Biggest Loser is the EU
- Trump Now Threatens Tariffs on All Goods from China: $450 Billion
- Chinese Tariff List Translated, 545 Items: US Farmers and Automakers Clobbered
- Trade War Hits Home: Trump's Asinine Protectionism
Trade Wars Unequivocally Bad
Trade wars are unequivocally bad and not easy to win.
This morning, before the emergency "one-time" news came out, I commented Tariff Backlash Could Cost Republicans the Senate.
Trump's action shows concern that I may be correct.
Mike "Mish" Shedlock