Monday, July 28, 2025

Trump’s Tariff Strategy Is Working – HotAir

July 28, 2025
0Points
0
Donald Trump Deals Leave Howie Mandel And Monte Hall In The Dust – HotAir
0
Shares

Almost every economist got it wrong. 

Not because the underlying theory that trade barriers are dangerous, but because they failed to see the bigger picture. As is so often the case, expertise is a two-edged sword: you may know your subject well while simultaneously missing the outside variables that shape the ultimate outcomes. 





As I argued for months, Trump’s tariffs had the potential to be very good or very bad, depending on what Trump was trying to do and how well he executed his plan. If the goal was “fortress America,” tariffs would make us all poorer as trade barriers jumped around the world. However, if Trump’s tariffs were about using leverage to rewrite trade deals to our benefit, they could be amazing. 

So far, it appears that Trump’s strategy is yielding impressive results. 

Trump talked about tariffs as if they were a good in themselves, which is not really true. In theory, the best trading regime is to have no trade barriers at all. Trade, after all, takes place when both sides of the deal are left better off (assuming no fraud, of course). I need your Lithium, you need my grain. Do the exchange, and each gets what they need. 

However, in the real world, it rarely works that way. Instead, countries try to manipulate the system to get outsized benefits, protect their industries, or for some other purpose. Our trading partners have been doing this since World War II, and America has tolerated it. After the war, it was to help rebuild Europe and Japan. During the Cold War, it was part of a larger, mostly unspoken, agreement in which we gained political leverage and our allies got preferential deals. 





Since the end of the Cold War, momentum and a level of indifference have prevailed in Washington, which was accustomed to subsidizing Europe and allowing the continent to run roughshod over our interests. 

Trump decided enough was enough, and bullied everybody into deals that are asymmetrically good for America instead of our allies. Payback, as it were. 

The strategy has worked. Trump has managed to bully Europe and Japan, two vital trading partners, into asymmetrical deals that benefit the US far more than Europe. Globalists hate the deals, but Trump doesn’t work for them, but for us. 

In the Trump-dominated global economy, the U.S. gets plenty but gives nothing in return.

Why it matters: This is the reality of the asymmetric trade deals touted by the White House, which show how far foreign leaders will go to safeguard access to the U.S. market.

The big picture: Trump announced agreements with Europe and Japan in which both agreed to drop their tariff rates to zero, promised eye-popping investments in the U.S., and opened markets to American producers.

  • In return, those countries get some assurance on their tariff rate — both 15%, and both of which could have been worse — even if it puts their industries at a disadvantage.

What they’re saying: “Both Tokyo and Brussels apparently viewed the price of a 15% tariff worth paying in light of the alternative of higher tariffs, uncertainty and counter-retaliation,” Wendy Cutler, former acting U.S. trade representative under Obama, tells Axios.

  • The White House said that smaller nations — including Vietnam, the Philippines, and Indonesia — would also lower their tariffs and open markets to U.S. producers.

Driving the news: Trump announced the U.S.-EU deal on Sunday afternoon in Scotland, mere days before the White House was set to impose 30% levies on European goods.

The intrigue: European Commission President Ursula von der Leyen said the deal would bring the stability and predictability that global businesses need.





Trump is cutting deals where our trading partners pay to access US markets, while the US gets free access to theirs. After all the threats of crushing tariffs and counterthreats of retaliation, it turns out that access to US markets is so valuable that everybody is willing to pay a substantial tax to get in the door. 

Think of it as a cover charge. $15 fee to get in the door, and a two-drink minimum. Look at how European entrepreneur Arnaud Bertrand reacted:

If Europeans were paying attention (or being told the truth), they should be beyond appalled by this “deal”: https://bbc.com/news/articles/cx2xylk3d07o

It’s nothing more than one of the most expensive imperial tributes in history. Just a massive one-way transfer of wealth with no reciprocal benefits

The “deal” is:

– The EU now gets charged 15% tariffs on its exports to the US when they commit to charging zero tariffs on US imports in the EU

– The EU agrees to invest $600 billion in the US, for no other obvious reason than pleasing “daddy”

– The EU will “purchase hundreds of billions of dollars of American military equipment”

– The EU commits to buying 750 billion dollars worth of very expensive US LNG, specifically $250 billion for each of the next 3 years

In exchange for all these concessions and extraction of their wealth they get… nothing. I’m not even exaggerating, that IS the deal: the EU gets nothing.

This does not even remotely ressemble the type of agreements made by two equal sovereign powers. It rather looks like the type of unequal treaties that colonial powers used to impose in the 19th century – except this time, Europe is on the receiving end.

More worryingly, this sets a dynamic and a precedent: what do you think happens next from here? In the 19th century, were colonial powers content with their first unequal treaty? Of course not – one of the key rules of geopolitics is that weakness only encourages further exploitation. 

Again, this is Europe’s century of humiliation.





Trump understood something the “experts” missed: other countries discovered they couldn’t retaliate. For all the brave talk, our trading partners realized that their economies would be devastated if the US made accessing our markets more difficult. European countries, if forced to choose between being in Europe and being in the US, would choose the latter. 

Trump had the leverage. He saw this because he is a dealmaker, not a theorist. I doubt he sat down and solved some equations. He just saw an imbalance and took advantage. 

The result is increased access to foreign markets AND more federal revenue. Economists had predicted economic doom, inflation, and a recession. 

Not quite. The opposite will happen. 





I was skeptical that Trump could pull it off, mostly because I wasn’t sure whether Trump loved tariffs as a good in themselves or whether he was using them to cut a deal. And while I suspected that Trump wanted to impose a cover charge for access, I never expected it would be this high. Few did. 

It demonstrates the dominance of the American economy. Nobody can live without it. Trump saw that. 


Help us continue to report on the president’s economic successes and combat the lies of the Democrats. Join Hot Air VIP and use promo code FIGHT to get 60% off your membership.





Source link

Related Posts

Load More Posts Loading...No More Posts.

TRENDING

© 2025 americanpolibeat -