Ramesh Ponnuru checks in the trade war. He disagrees with President Trump that America is winning.
Ponnuru doesn’t see victory in the EU’s promise to talk with the U.S. about eliminating tariffs:
Trump episodically claims that he wants zero trade barriers all around, and it’s a good thing that we’re going to have talks with the EU about liberalization. But we didn’t need to place tariffs on steel and aluminum, in the process inflicting damage on the many American companies that use steel and aluminum in making their own products, to get Europe to the table.
Negotiations with Europe to bring trade barriers down were further along before Trump took office than they are now. Trump is the one who froze those negotiations for a Transatlantic Trade and Investment Partnership, in order to launch his trade war.
Many other trade agreements have been concluded over the last few years without any need for self-destructive tariffs. The EU and Japan just made a deal. Neither had to restrict imports from the other first.
The EU has promised to buy more soybeans and liquefied natural gas from America. But Ponnuru doesn’t see victory here, either:
European soybean imports from the U.S. were likely to increase naturally. China is buying fewer soybeans from the U.S. as part of the fallout from our trade war with it. That means it will buy more soybeans from Brazil, and so Europe will have to buy more from us.
All the EU is saying about gas is that it will import more from America as it builds its capacity to do so. That’s something that was going to happen anyway, with or without any agreement with Trump — and with or without his tariffs and tariff threats.
I don’t know enough about the soybean market to agree or disagree with Ramesh here. I’m willing to assume that we will be selling Europe more soybeans thanks to the promise the EU has made, even given that Europeans would have had to increase purchases from us due to China buying all those beans from Brazil
But will the U.S. be selling more soybeans to the world than we would absent the trade war with China? Or will the increased European purchases just offset, partially or in whole, the lost soybean trade with China?
I don’t know.
It is of course always possible that tariffs or the threat of tariffs will lead other countries to drop their own trade barriers or reduce their use of abusive practices such as the theft of intellectual property. So far Trump’s tactics — his tariffs on washing machines, solar panels, steel and aluminum, and Chinese imports — have yielded almost no such reform. The one exception: South Korea has raised the number of cars it will allow American companies to sell. But that is a fairly theoretical gain, since American companies have not been hitting today’s lower caps.
What isn’t theoretical are the higher costs for American consumers and companies Trump’s tariffs have imposed, or the retaliatory tariffs they have provoked.
It seems quite premature to claim victory for the U.S. in the Trump trade wars.