As his August 1st tariff deadline approaches, governments have been arguing over who can concession Trump. The US president’s biggest victory to date came on Sunday when Ursula von der Leyen, the head of a vassal state honoring an emperor, visited Trump’s private golf course in Scotland to pay him homage.
Brussels agreed to a significant tariff increase and made a pledge to spend hundreds of billions of dollars on US military and fossil fuels as part of an entirely one-sided tariff pact.
The relationship between the world’s two largest economies has changed as a result of the pact. Simply put, the EU has rolled over in a row. A European diplomat lamented by saying “those who don’t hang together get hanged separately,” while French Prime Minister Francois Bayrou described it as a “dark day” for the union.
The rest of the world’s economy is likely to suffer even more. Trump has waged an economic war against both friends and foes. Many nations are unable to defend themselves and are subject to higher tariffs than the EU. Brussels has made it more difficult for other nations to stand up for themselves by giving in.
For instance, a 40% tariff on Laos or a 36% tariff on Cambodia will harm the export-focused industries that US corporations have supported for decades. And other nations are reluctant to discuss the situation without a united front.
Before the US president made it known, it was unclear if Manilla had fully consented to the arrangement, which Trump announced last week with the Philippines, which would apply to all products exported to the US and exclude any imports. Indonesia’s deal is even worse because it has to relinquish controls over its important mineral exports and aspects of its emerging digital economy, both of which are crucial to its economic growth. US demands for Brazil go beyond the economic realm, with Washington even going so far as to try to obstruct former president Jair Bolsonaro’s prosecution.
Although the terms of various trade agreements vary, they all have the same goal: to pressure governments into altering their laws and regulations, particularly those that favor US business interests.
Trump’s approach to trade negotiations may be wildly erratic, but his ultimate goal is to replace unfair rules with absolute dominance from the biggest bully in order to upend the world economy.
The nations that are subject to this restructuring will suffer as a result, but this won’t be the end of the story. They have strengthened Trump’s hand by granting him what he wants, and he will return.
The EU already has little understanding of the impact of the proposed “deal” that the US president might enter. In order to obtain a deal, Canada removed its digital services tax from Big Tech, only to be hit by higher tariffs. Despite making concessions, the Philippines is now subject to a higher tariff than it was in April. And the UK eventually discovered it had no such thing, really.
None of this is fair. Trump doesn’t respect weakness, so his only option is to stand up for him.
For nations that have signed a deal, it means putting as little into practice as possible. Retaliatory governments are encouraged to do so. That doesn’t necessarily equate using the tools that have the best strength, which would be a policy that could lead to serious self-harm, but rather matching tariff for tariff.
By restricting US corporations’ access to, for example, government contracts, financial markets, and intellectual property protection, the EU should have retaliated.
The EU showed a profound ignorance of the present situation by refusing to take such measures. Van der Leyen appears to believe that Trump is a temporary anomaly that can be contained while the industry waits for a new business model to emerge in four years.
However, the general public has had enough of a corporate-dominated global economy in Europe and the US. There is no way to go back to that world. Retaliatory measures like those described above can help to lessen the influence of the monopolies at the heart of our deeply unfair, unsustainable economy by maximizing the pain being caused to Trump’s oligarchic friends.
This crucial last point. Because we cannot get there by handing Trump unnecessary victories if we want him to be gone, as millions of Americans do. Trump came to power by establishing a bridge between those who oppose a corporate-dominated economy and the wealthy. It was a remarkable achievement. However, he will only remain in power if the alliance endures.
The key is now how governments can best safeguard their economies over the long term, and that means regaining sovereignty rather than giving it to the White House bully. In addition, this action can reveal Trump’s true identity as a corporate lobbyist and pave the way for his eventual demise.
