Dem
47
GOP
53
Yesterday Donald Trump and European Commission President Ursula von der Leyen announced that they have a tentative trade deal. Instead of the 30% tariff Trump had proposed for E.U. exports to the U.S., the tariff will be only 15% on most products. The tariffs on steel will remain at 50%, however. Additionally, the E.U. will buy $750 billion worth of liquified gas and will invest $600 billion in the U.S. and buy military equipment.
At first glance, it appears that the blackmail worked. Trump simply announced a 30% tariff on products from the E.U. and after a lot of negotiation and promises that the E.U. would invest in the U.S., Trump agreed to cut the tariff to 15%. The E.U. got nothing in return. Of course, this is only a tentative agreement and there could be a lot of pushback within the E.U. when everyone sees the details.
But even if the E.U. got nothing, there is a downside on 15% tariffs on products from the E.U. and Japan. That is probably not enough to cause any American companies to build factories in the U.S. to compete with imports, but it is enough to spark some inflation. Maybe Trump's endgame is to get a 15% tariff on exports from every country in the world. In most cases that will be up from roughly 0% to 15%. In this context, keep in mind that the famous Smoot-Hawley tariffs that energized the Great Depression raised tariffs from about 13.5% to 20%. This is a bigger jump than that. (V)