Europe’s Trade Coup
At the core of the recent US-EU trade agreement is the understanding that the two sides will “work together" toward zero tariffs and non-tariff barriers. But the potential for a free-trade deal isn’t the point; the end to the escalation of tit-for-tat tariffs is what matters – and not just to the US and Europe.
BRUSSELS – All has gone quiet on the transatlantic trade front, with last month’s agreement between US President Donald Trump and European Commission President Jean-Claude Juncker having dispelled fears of an all-out tariff war. The deal was surprising, but perhaps it shouldn’t have been.
At the core of the agreement concluded by Juncker and Trump was the understanding that the European Union and the United States will “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” with no new trade barriers in the meantime. But the potential for a free-trade agreement isn’t the point; what matters is the end to the escalation of tit-for-tat measures, set in motion by Trump’s decision to impose tariffs on US imports of European steel.
The US president has the power to impose tariffs and other trade barriers unilaterally, in the interest of national security. That is why Trump has been able to launch his own personal trade war, without so much as consulting the US Congress. A full-scale trade agreement, however, would need congressional approval. Given the myriad special interests that such a deal would mobilize, it is highly unlikely that any trade agreement – even one limited to industrial products – will materialize any time soon.