My Alarby TV Qatar [English above, Arabic is below] from Berlin Brandenburg Gate studio 12 July.
Summary points: I discussed Trump’s announcement that the USA would impose 30% tariffs on the European Union. (For my “must read” Trump tariff key analysis, see my post “(1)Trump is following Miran’s tariff strategy (2)My reply to Jeff Sachs on USD’s role (3)Tariffs boost EU deindustrialization & (4)turbocharge German auto-crisis (5)Trump’s EU energy-purchase demands” This post keeps getting most hits.)
I focused on context – the global USA strategy here – and the state of EU-USA negotiations. The negotiations are going fairly well with most issues near to being settled. However, it is no secret that Europe is in a very weak geoeconomic position (e.g., see Jamie Diamon’s EU warning, FT) exacerbated by Van der Leyen having “hesitated” (zögern in German) as Trump “escalates.” Euractiv having followed a low-key strategy of detachment from talks, relying on her ever-negotiator, Maroš Šefčovič.
The EU backed down on digital taxes on USA IT firms (Politico) and negotiations are advanced on agricultural, automobile, and pharmaceutical tariffs. These seem the focus now.
Trump had said he’d delay 200% pharma tariffs for a year, but now says a 1 August tariff imposition is likely.
I misspoke on EU agriculture. It’s not that the EU is “famous” for “tariffs” protecting its ag against imports, what it’s actually “famous” for are subsidies for its agriculture, which Trump has targeted as unfair. (Note: the EU’s higher farm subsidies are seen to be a significant factor in lower average EU vs. USA agriculture productivity growth since the early 1990s. See USDA here, esp. from p. 33 .)
I predicted a general settlement will be found before 1 August, and the EU will hold off on retaliatory tariffs to focus on negotiations.
I stressed this is mainly about the USA aim to isolate China and undermine its great dominance in manufacturing and the geo-economic and geosecurity consequences of this. This is why Trump et al focus, besides China itself, on tariffs on SE Asia – especially Vietnam – and Mexico as it wants to diminish the capacity of China to escape tariff restrictions and massively access the USA market either by relocating its manufacturing in SE Asia or Mexico or rerouting Chinese product exports through these states.
The EU too is now being constrained, in its own interests, to take direct actions against China to keep it from dumping manufactured products at low prices in the EU and wrecking EU manufacturing further as it cannot send so many products to the USA now given Trump’s new tariff and other restrictions. I pointed out that the EU actually has a longstanding problem of its agriculture being highly subsidized which moth makes its agriculture sector lag in productivity as vs the USA, where especially since the early 1990s, there has been much higher growth in agricultural productivity. The main focus of negotiations now for the EU and USA seems to be on automobiles.
The Global Barrel 