Dear Donald Trump, Please Prove Me Wrong

Trump says he believes in free trade and the elimination of tariffs. Does he? We are about to find out.

Politico reports EU says it is willing to scrap car tariffs in US trade deal.

>We said that we are ready from the EU side to go to zero tariffs on all industrial goods, of course if the U.S. does the same, so it would be on a reciprocal basis, Malmström told the European Parliaments trade committee.

>We are willing to bring down even our car tariffs down to zero if the U.S. does the same, she said, adding that it would be good for us economically, and for them.

>The EUs car tariff of 10 percent is higher than the general U.S. auto tariff of 2.5 percent, but America imposes a 25 percent duty on light trucks and pickups.

I called Trump's free trade proposal a bluff.

Dear Donald Trump ...

Please prove me wrong. As a free trade advocate, I will be more than pleased to admit I was wrong.

Mike "Mish" Shedlock

Comments (25)
No. 1-11
Realist
Realist

Bravo! Zero tariffs. Bring it on! Now have the US do the same for all other industrialized countries. And while theyre at it, they could reduce the hundreds of billions that the US spends on subsidies. Consumers would benefit.

Top-GUN
Top-GUN

Zero on industrial goods....HOW About Agricultural goods.... France is notorious for it's protectionism!!!

thimk
thimk

i was waiting for your comments after reading trump's response, and it didn't take long. good deal for America, industrial capital potentially might flow into the US. Potus speaks with forked tongue.

2banana
2banana

Mish - so much hate against DJT and yet he now has the EU at the bargaining table with zero tariffs for cars.

Eight years of obama rolling over and playing dead - nothing we can do...globalism...manufacturing is dead in America...jobs Americans won't do...we will be a new service economy...sling that coffee while I blow bubbles with QE and ZIRP....utter bullsh!t.

And not a peep from you.

SweetKenny
SweetKenny

As Bloomberg notes, eliminating tariffs on U.S. auto imports "would do little for General Motors Co. and Ford Motor Co., but would lend a major boost to Germanys BMW AG and Daimler AG." SUVs assembled by the German carmakers in the American South dominate the models exported to Europe from the U.S.. Why trust the EU when they admit you have to lie when things get serious.

Sechel
Sechel

Donald Trump doesn't want free trade. He wants managed trade. From today's Bloomberg article.

Trump told Bloomberg that eliminating tariffs on U.S. car imports would do little to help the U.S. car industry, as European consumers would still not buy American cars. Their habits, their consumer habits are to buy their cars, not to buy our cars," he said.

It's very obvious when Trump came up with his proposal of zero tariffs on everything he was both bluffing and posturing. How could anyone have believed otherwise.

Also seems a waste of political capital to spend so much time on a legacy industry that will continue to employ less and less workers through automation and is in the process of undergoing huge upheaval as a result of the shift to electric vehicles and fundamental changes in how vehicles get used(zippcars, uber etc). Ford debt was just downgraded to one notch above junk. What are we protecting?

KidHorn
KidHorn

Their eliminating a 10% tariff in exchange for us eliminating a 2.5% tariff is a good deal. The pickup truck stuff doesn't matter. Are there any pickup trucks made in Europe? I know Mercedes is big on utility vans, but it's still a good trade off IMO.

Realist
Realist

Its all industrial goods, not just cars. Zero tariffs. Good for everyone. Now do the same with other industrialized countries; Japan, Korea, Canada, Australia, New Zealand etc. But dont expect poorer countries to do the same; China, India, Mexico etc. Of course, I would be surprised if this could actually be achieved.

Webej
Webej

Actually, Trump said of the EU, [it's not their tariffs,] they're worse than China, only smaller (which !surprise! isn't actually true in terms of the size of the economy and the market).

Mish, could you explain what would happen if Americans stopped buying so many imports so that the balance of trade in goods would be zero, while simultaneously borrowing upward of a trillion dollars a year above tax revenues?

Realist
Realist

The reason Trump will rarely agree to any deal is that he actually NEEDS enemies to attack. It is the politics of hate. In order to garner support from his base he needs to focus their anger on some imagined enemy. So he turns everyone into an enemy. Every person he ran against in the primaries was an enemy. He was full of derision for his fellow candidates. Then there was Hilary. And the swamp. And every trade agreement was the worst in history. And every trading partner is taking advantage of the US. And every country is a currency manipulator. And on and on and on. Thats why Trump will agree to something and then renege on it. He doesnt need or want friends. His entire world is about creating enemies. Thats why he is isolating the US from all its former allies.

Kinuachdrach
Kinuachdrach

Mish -- You have some good insights on several issues, which makes it worth continuing to come back here. But whenever President Trump's name is involved, you seem to lose the plot. Just listen to what the man says, and it mostly becomes clear.

  1. For the first time in goodness knows how long, the US has a President who puts the US and the interests of its workers first. That is refreshing!

  2. Fair Trade is more important to him than (Unilateral) Free Trade. 0% tariffs are good -- if they apply to both sides. Same with 25% tariffs. And he is aware of the importance of non-tariff barriers -- a critical item which does not even exist in the theoreticians' over-simplified free trade model.

  3. He is a negotiator. He understands that he is involved in a long process of reversing a generation's worth of Swamp Creatures' self-dealing (which sacrificed the interests of US workers along the way). He knows we are not going to get to Nirvana in one easy step before the commercial break. Would that Unilateral Free Trade activists were as realistic!