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And yet, trade balance is incredibly relevant to a supermarket metaphor. The supermarket is in the business iof maintaining a positive trade balance with its customers, because if the supermarket does not then then supermarket goes out of business. This is, in fact, the basis of the threat to go to another (China) supermarket- it is a threat to reduce the trade income with MuricaMart, on the assumption that MuricaMart makes a profit off of trading with you.
If you think a supermarket's profitability is irrelevant to the interest of a supermarket staying in business, you are not talking about a supermarket.
Because the trade balance was itself a trade- a systemic trade bias in European favor (thanks to higher tariffs against American goods than for European goods) in exchange for European military cooperation against the American geopolitical rival. That prioritization of shared security over money was the positive sum dynamic that motivated the initial alliance beyond the monetary cost.
When the Europeans are not interested (as you are not) or able (as the continent is not) in upholding that positive-sum game, then the negative-sum game of trade flows absent other interests reasserts itself.
Good news! Donald Trump will graciously allow the Europeans to be free of that accusation by magnanimously leveling trade barriers and trade deficits that the Europeans currently have over the United States. He will even support the Europeans in raising their own anti-dumping tariffs on any global overproducers, of which the most notable is China.
If you are poor, what do you think you have to offer for preferential trade access to the American market?
Remember that the approval of European public is not required for the end of the structural basis of the European-American alliance via the end of American economic subsidies to the poorer European public from the American end. (Arguably, European public opinion has already approved of this from the European end, by continuing to vote for decades of demilitarization and increasing strategic autonomy before there was an end to advantageous trade terms.)
The American public, at least, has in the last election indicated it is not convinced that major trade deficits are the cause of American economic health, as opposed to unnecessary costs that lowered them more than they could have otherwise risen. They may be wrong, but being wrong does not change ambivalence for ending subsidies to other continents, despite the near-term economic disruption that could bring.
The question for the European public, as a result, is what does it want to offer- if does and if it can- to keep some manner of American subsidies coming, even if at a reduced rate.
Apparently not, since you misunderstand my position (or seem to believe it is Trump's). Instead, let me try to place your position and the Trumpian position in an inconvenient context.
You see trade as mutually beneficial, but you do not want to deliver what was traded in the original Euro-American alliance- Europe's military-strategic deference against the American geopolitical rival.
The Trumpian perspective is that this is fine! This is your sovereign choice. He just also does not see a point in continuing to provide concessions that were initially provided for such a military-strategic deference deal. He will not blame you for it if you think it's a bad deal. He doesn't think it's a good deal either. That's why he's willing to reduce it.
The inconvenient context is that this is only blackmail if there is an expectation that European market access preferences are an entitlement that should be provided regardless of degree European strategic alignment.
If there is no European entitlement to preferential market access, then what we are observing is not blackmail, but the mutually consenting unraveling of a former trade deal: the Europeans no longer want to offer strategic deference, and the Americans no longer want to subsidize the Europeans.
Buying an item in the supermarket (or trading beans for bacon with my neighbour) is a mutually beneficial transaction. I don’t owe walmart military service afterwards.
Was this military-support-for-one-sided-tariffs agreement commented on by anyone at the time (preferably european)? These needlessly complicated ‘subventions’ breed confusions. Next time we’ll take it in cash, not in trade.
You’ve had a way bigger deficit against china than us for a long time. What did they agree to do for you in order to get this preferential treatment? We have a big deficit against saudi arabia – is that a subsidy too?
The average tariff between US-EU is 3%. I don’t mind equalizing if you find an ‘unfair’ percent here and there, but it’s not going to meaningfully change the balance of trade, because it depends on other characteristics of the economy. So Trump is still going to claim exploitation and raise tariffs 25 % and so the people, agreeing to disagree, will mutually consent to the unraveling of mutually beneficial trade.
If the supermarket is losing money selling to you, it is not a mutually beneficial transaction.
A transaction is only mutually beneficial for the supermarket if both parties are getting something they want that is worth more (to them) than what they give up. What the supermarket wants in exchange for your purchases is money. If the supermarket is losing money on the deal, it is not getting more than it loses.
Because Walmart is not subsidizing you for a military alliance. Which is why the supermarket metaphor is, again, bad. The European-American alliance relationship is not like your relationship with Walmart.
It's fine that you don't want to provide military support to your allies. It's even fine if you don't want military allies. Just don't expect to benefit from economic benefits provided in exchange for a military alliance without the military alliance.
...yes. There is plenty of historical documentation on the strategic rational of the Marshal Plan, from both sides of the Atlantic. It is not hard to find. Nor is the history of the European-Japanese and European-Korean trade relations.
You can search for it on your own if you are curious, though I'd actually recommend against the Europeans for anything more recent (since the EU's creation), since the EU establishment has significant interest incentives to downplay, ignore, or reframe why US-EU tariff barriers are at the level they are. The general EU-adjacent policy sphere refrain is that EU tariff walls don't meaningfully hinder American trade with Europe, but also that equivalent tariff barriers is very bad.
If you insist, pending your ability to arrange such. Mercenaries with little military capabilities to offer have little ability to dictate terms, however, and cash transfers are less enduring than trade concessions.
And you'll note that Trump has been an even larger advocate of tariffs against the Chinese than against the Europeans. This is a poor whataboutism, given the politician involved.
As for what the Chinese agreed to- the answer is they didn't, nor did they need to beyond some promises for market reforms that they've largely ignored. The post-Cold War US administrations thought integrating China into global markets markets would lead to political liberalization, which would have been the 'benefit.' This was expected to occur naturally. It did not occur / has not occured, and is generally considered a major strategic mistake of the Clinton administration.
No, European purchases of middle eastern energy is transactional. Notably, the Arabs are making a profit off of providing their good/service to the Europeans at market rates.
There is no meaningful 'average tariff.' Averaging non-comparable categories leads to meaningless numbers, given the difference in the scale of the economies those tariffs apply to and the relative importance applied to them.
To bring a relevant specific category: automobile manufacturing. During the first Trump administration, it was considered extremely provocative when Trump raised the import tariff of 2.5% on European cars, in a context of importing 1.15 million cars for around 43 billion. At the time, the European tariff barrier for automobiles was 10%, in a market about 260k US cars exported for around 6 billion.
Even if there was an entire category of X-but-small trade volume at 0% tariffs, that wouldn't mean the 'average' tariff was 5%.
The characteristics of the economic differences is the point of the protectionism.
From a macroeconomic perspective, the US primarily exports services and resources, and inputs manufactured goods. This is in part a result of the American macroeconomic decision to export manufacturing during globalization, which significantly impacted American manufacturing capability while bolstering other parts of the world- especially China. Various parts of those industrial base losses were relevant to military production rates, as military industry is converted from / tied to domestic industrial manufactuing capacity.
The Americans are in the process of re-industrializing, for strategic and other reasons. Part of that is setting the rules so that the economic incentives of companies isn't to immediately decamp industry and then sell from outside of the US to the US. These are characteristics of the economy that are being deliberately changed.
In this respect, the Americans are aligning to a European norm. The Europeans were embracing industrial policy as a systemic government priority well before the Americans, and won the argument. Trump, Biden, and now Trump again are adopting a more European-understanding of the value of trade barriers.
There is not a mutual consensus that it is mutually beneficial trade. That is a point you do not acknowledge because you do not want to agree that it is not mutually beneficial, even though your concession is not necessary, by definition, for there to be a lack of mutual consensus.
You may think the trade is mutually beneficial, and you may think that the Americans should feel the trade is mutually beneficial, but your thoughts do not matter for whether the Americans in question believe it is mutually beneficial trade. If they do not, they will not continue as if it is.
The question, as raised earlier, is what you are willing to offer to make it convincing to the Americans that it is in their interest. Given that they do not believe the current exchange ratio is favorable, you can either increase incentives, or decrease perceived costs.
That goes for the US as well, they have incentives to downplay, ignore, reframe all their own barriers(for example in the airbus-boeing trade fights). You said ‘military support for advantageous tariffs’ is an agreement. Doesn’t sound like the EU agreed to it.
Of course they are, the question is what the europeans are getting out of it, since according to your view, the buyer (guy with a trade deficit, here the european) is just handing out ‘subsidies’. So if I buy oil from an arab, that’s a fair trade, but if you buy champaign from me, that’s a subsidy?
You have a 25% tariff on light trucks including SUVs, which is the majority of the US car market.
I think it’s based on value of goods sold. So if the EU sells 100 B and the US takes in a total of 5 B tariffs, that’s an average tariff of 5%, whether some tariffs are at 0% and others at 50%.
I’ll agree that average tariff of the good traded does not mean that much since entire parts of the EU-US trade are high tariffed to zero trade happening, like a lot of agricultural products, cars.
As I said on principle I don’t mind equalizing all the tariffs (though I’ve just read the 25% light truck ‘chicken tax’ seems hard to repeal because of bipartisan support) , but it’s not going to help your trade deficit because the deficit is not caused by preferential tariffs.
No one ever truly wins these economic fad arguments, they wax and wane. It's true that european elites are fond of their dirigisme, and it always ends up being an expensive clusterfuck.
Nothing. If they don’t think trade benefits them, I can try to argue that it does, but if they don’t see it, I’m not offering a bribe, they can just walk away. They’re a free country.
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