How to react to Trump's tariffs
The EU reacted to earlier Trump tariffs with tariffs on products from Republican states in the US, such as beef, poultry, bourbon and motorcycles, bourbon, peanut butter and jeans. It shows how dysfunctional the EU is. It was a very weak response as the EU was cowered by Trump’s threat to impose a 200% tariff on wine.
These tariffs show how subservient the EU elites have made themselves to the Atlantic cabal. They refuse to see a real difference of interest between the EU and the US and instead see Trump as just another opponent of NATO who must be opposed with all means possible. They hope that after Trump everything will return to the “normalcy“ of before Trump.
Yet Trump’s policies are a continuation of Biden’s. Trump wants to bring industry back to the US. Biden wanted that too. His means where a bit more sneaky than Trump’s. Instead of imposing tariffs he destroyed the Nordstream pipe line and he pushed the EU countries to give up on Russian oil and gas. When that led to high energy prices inside the EU he encouraged European companies to move to the US.
Trump’s reasoning is deceptive. He considers only the trade in goods, not that in services. When you consider services too there is only a 6% trade disbalance: 822 vs 774 billion euro. This is very reasonable when you consider that Europe imports much more of its energy than the US and that services tend to be more profitable. The original plans for more European arms orders in the US could even have shifted the balance in favor of the US. So let us not deceive ourselves: the US wants the outside world to build new factories in the US and it will use any means to achieve that goal.
There is a lack of symmetry in the European answer to Trump’s tariffs. The US aims for permanent changes by moving European factories to the US. The EU imposes sanctions that will do little long term harm: after the tariffs are abolished the situation will soon return to how it was before the sanctions.
Instead the EU should target the American monopolies that for a long time have provided the US with leverage over the EU. The high price of such dependence is now very clear:
- In information technology the US enjoys many advantages over the EU. Microsoft, Google, Facebook and Amazon enjoy all quasi monopolies without matching European competitors. This is at least partly due to the fact that the US military-industrial complex largely excludes European companies while actively promoting American ones. Heavy lobbying for American companies inside the EU contributes too.
The dominance of the US in information technology is no coincidence. It is deliberate policy. That is the main reason that the US is so hysteric about Tiktok and Huawei: they threaten this dominance and more subtle efforts to undermine them have failed.
Some policies that could give Europe more control. It could subsidize social media projects that involve translations. It could stimulate European companies that have success in one land to expand to the rest of Europe. It should require that governments have their data stored inside Europe by European companies. It could require that companies store their data in Europe.
One of the reasons that ChatGPT and its colleagues have been such a success is that they are multi-lingual. When you ask something in one language it will include information from other languages in its answers. Such a thing should also be possible with search engines.
- The US likes to impose sanctions based on the US ownership of certain technologies. The EU should draw the logical conclusion and forbid the sales of companies to US firms and the relocation of firms towards the US when they possess any technology that the US could use for this purpose.
- Europe has been destroying its defense industry by increasingly buying its arms from the US. As a result in case of war the EU will dependent on the US for parts and repairs. It also means that the EU misses out on developing advanced technologies that also have civilian use. The EU should apply a strict buy-European approach and gradually sell any US weapon that it has to other countries.
- Finance is another sector where the EU has made itself dependent on the US. There is no reason we should allow Blackrock and similar firms to buy European real estate and companies.
Tariffs are not the only way in which the US wants to achieve its goal of more foreign investment. It also has the CHIPS act that subsidizes desired investments and it is pressuring foreign firms. Similarly the EU will need a broad set of policies to achieve its goals.
Trump will not let this pass unpunished. He will impose tariffs on wine and other products. Europe should be prepared for that. The logical answer would be something like a ban on Californian wine and financial support for the European wine industry.