Dem
47
GOP
53
As long as we are on the subject of things we don't really understand, we don't really grasp how big the gap is between a "tentative" trade deal and a finished trade deal. What we do know is that there's gotta be at least some gap, though, and that means there is at least some possibility that the tentative deal with the EU, announced over the weekend, won't actually get across the finish line.
Not surprisingly, a lot of leaders of EU nations are upset, taking the view that Donald Trump took European Commission President Ursula von der Leyen to the cleaners. The fascist vote is actually split, as Italy's Giorgia Meloni likes the deal, while Hungary's Viktor Orbán hates it. Most of the rest of the far right agrees with Orbán, while Chancellor Friedrich Merz said that the deal is bad, but better than no deal. French president Emmanuel Macron has been notably silent, but French PM François Bayrou has been all over social media with remarks like this one: "It is a dark day when an alliance of free peoples, united to assert their values and defend their interests, resigns itself to submission."
Could the angry nations somehow compel von der Leyen to back away from the deal? We don't know the dynamics of EU governance quite well enough to know how likely that is, but it's certainly more likely with a "tentative" deal than with one that has been signed, sealed and delivered.
There is also one other issue coming from the European side of the negotiations, and that is the "promise" to invest $600 billion in the United States. Yesterday, two senior European Commission officials made clear that the money, if it comes, would come entirely from private companies, and not from the public sector. Inasmuch as private companies do not spend $600 billion for charitable purposes, one has to imagine that means that the money would only be invested in the United States if those companies were going to do so anyway, and the trade deal is basically irrelevant here.
Meanwhile, although Trump and his team certainly appear to have gotten the upper hand on von der Leyen, $600 billion or no, there is at least one source of unhappiness in the United States, and that is the auto industry. Dealers who specialize in European stock are going to see their prices go up, even if it's by less than previously expected. Meanwhile, U.S. automakers, who manufacture many of their cars in Mexico, are still set to pay 25% tariffs, which means they are now at a disadvantage as compared to the Europeans and their 15% tariffs. It all adds up to fewer car sales for carmakers and car sellers.
Trump rightly declared victory in the latest trade battle. However, this trade war is far from over. First, we have to wait and see if this tentative deal becomes an actual deal. Then, if it does come to fruition, there will be many things to watch for: (1) Will Trump decide he wants more, and try to take another bite at the apple?; (2) Will the EU nations, once they've had a bit more time to consider things, find some way to retaliate against the deal? and (3) Will the deal have inflationary, or other economically deleterious, effects?
As we have noted many times, trade deals are tough. And often, even the experts who negotiate them don't know how things will turn out until the actual chips have fallen where they may. (Z)