When Trump excoriates members of the G7 and the European Union as a whole, some of the more self-deprecating financial voices from those very regions are inclined to acknowledge that he has a valid argument.
Recently, the Munich-based Center for International Economics’ Director, Gabriel Felbermayr, reported that “The EU is by no means the paradise for free traders that it likes to think.” He added that when Trump rails about “massive tariffs,” he’s not far off the mark.
Felbermayr further acknowledges that the European Union is the bigger offender when compared to the US. One of the most glaring disparities is when looking at auto imports.
America charges the EU 2.5 percent in tariffs while the EU charges the US 10 percent. Perhaps it’s fair to say that Trump’s harsh rhetoric is far less offensive than Europe’s harsh tariffs.
Addressing this issue a few months ago, Trump tweeted, “If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a tax on their cars, which freely pour into the US.” He added, “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
Brashness aside, he’s correct when arguing that they’re sticking it to us, and clearly that treatment is far more inexcusable than is his tone when pointing it out.
Frequently forgotten, but revelatory in hind-sight, has been the European Union’s inability to form its own Constitution because too many of its member-states have refused to give up their own respective socialistic demands for protectionist-based trade policies.
This has been about individual government subsidies for certain favored industries. While the EU has no tariffs between its member states, these protectionist policies are effectively having the same impact. As such, their collective insistence on maintaining tariffs (even as they insist that the US not counterbalance them with its own), would seem very consistent with their current malady in logic.
Additionally, the EU charges America 17 percent tariffs on apples and 20 percent on grapes. Now there are a few areas where the US charges more than the EU, but the aggregate tariff imbalance going in Europe’s favor is measurably unambiguous.
Strangely, many Democratic politicians often making the same complaint (because the imbalance threatens the long-term job security of their union-based constituency), are counter intuitively mute on the current controversy. Why is that?
And while these union-backed Democrats remain stubbornly quiet, plenty of the more two-dimensional rabid Lefties, like Hill columnist Brent Budowsky, are only too happy to make moldy hay over the current debate.
In a recent piece entitled, “Reagan would denounce Trump’s attacks on NATO, democratic allies” (07-03-18), Budowsky tells us that, “Reagan believed in tough trade negotiating but would be outraged and scandalized that Trump threatens a global trade war against our strongest democratic allies in the world.”
This bad-faith critic not only obscures from the reader the existing 2.5% to 10% tariff ratio favoring the EU, but also ignores that America’s tariffs are among the lowest in the world.
Furthermore, it’s hardly free trade when other NATO allies, like Japan, impose regulations to ensure that for every one hundred cars it sells here, we’re only permitted to sell one over there.
Since when are ‘bend-over’ double-standards ever defensible?
Please pass the Vaseline.
