U.S president Donald Trump continues to be blamed for initiating a trade war with Europe, when indications for that are not entirely there. During this week's rally in West Virginia, however, Trump reiterated that he'd love to see no tariff-barriers whatsoever. Why is he still not striking a nerve with EU leaders?
Watching a Trump rally, such as the one in Charleston, West Virginia, very much reminds me of the German word of "Fremdscham" (feeling embarrassment for the behaviour of someone else). Trump brags and tells blatant untruths to the extent that we've become used to it. But once in a while, when he stays on message, he reiterates beliefs of his that would actually constitute sound public policy. Both during and after the meeting with EU Commission president Jean-Claude Juncker in Washington, D.C., Trump again talked about abolishing all tariffs, non-tariff barriers and subsidies.
He did the same during the rally in West Virginia this week. In fact, Trump has repeatedly mentioned that "this is how we learned it at the Wharton School of Finance", which actually tells a positive story about the economic education provided by said school.
"Ultimately that's what you want, you want tariff free, no barriers, and you want no subsidies because you have some countries subsidizing industries and that's not fair," Trump said. "So you go tariff free, you go barrier free, you go subsidy free, that's the way you learned at the Wharton School of Finance."
Should Juncker wish to actually make good on his claim of walking in the footsteps of statesmen such as Robert Schuman, he’d embrace full free trade. In trade between rich and poor countries, both sides benefit because they pay less for products, capital goods (machines, computers, etc.), and highly specialised labor. While it is true that job losses can occur when competition increases, it is important to account for increases in exports through free trade. The German car producer Mercedes might not like the competition of Italian cars on the German market, but since many Italians purchase his product, it’s manifestly more profitable to trade freely.
Protectionism is purely ideological because it is based on sentimental beliefs. If we were to take nationalism out of the picture, it would be difficult to argue that international free trade would be disadvantageous while domestic free trade (say, between cantons or provinces) is advantageous. This is particularly true in large trading blocs such as the European Union or, for that matter, the United States.
Tariffs are nothing more than a useful tool for the reactionary extremes of the right and left wings of the political spectrum. This is all the more visible in the sense that whenever Trump addresses the idea of freeing trade relations from all government intervention, nobody even bothers to address it. However, when Trump announces, yet again, putting a 25% tariff on European cars, as he did on Wednesday, he's sure to get reactions from EU leaders.
Trump’s free trade proposals remain unheard because the solution of subsidising or protecting through standards is immediate and popular. The European Union doesn’t follow an ideological line on free trade,--it merely pretends to do so for the efficacy of political point-scoring.
The solution on trade isn’t “somewhere in the middle”. The idea that we’ll import some American products here and there in order to get temporary concessions on some of our own goods is unproductive and hurts consumers. The only answer Jean-Claude Juncker should give when Donald Trump suggests completely free trade between the two continents is “yes, please”.
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