Trump Tweets "Tariffs are the Greatest!" Seeks "One-Time" Aid to Farmers

Trump offers farmers $12B in "one-time" aid to stem allegedly "illegal" trade retaliation by China and the EU.

All Will Be Great!

Showing concern over mid-term elections, the Trump Administration Plans Up to $12 Billion in Farm Aid to Ease Concerns Over Trade Disputes.

The Trump administration on Tuesday announced an emergency-aid package of $12 billion for farmers amid growing concerns that the U.S. agricultural sector could suffer from President Donald Trump’s escalating trade dispute with some of America’s largest trading partners.

The trade rift between the U.S. and some of its closest allies has prompted retaliations and legal actions following President Trump’s decision earlier this year to impose tariffs of 10% on aluminum imports and 25% on steel imports from Canada, Mexico and the EU.

U.S. Agriculture Secretary Sonny Perdue said Tuesday the “one-time” program would help farmers meet losses resulting from “illegal retaliation” to U.S. tariffs, and wouldn’t require congressional approval.

Last week, Mr. Trump threatened “tremendous retribution” if his meeting with the EU officials this week doesn’t lead to what he considers to be a fair auto-trade deal. Mr. Trump said recently he considers the EU “a foe” on trade. Mr. Trump repeatedly complains that the EU imposes 10% tariffs on auto imports, compared with 2.5% imposed by the U.S. He declines to mention the 25% tariffs the U.S. imposes on light trucks, vs. the 10% rate in Europe.

Accurate Summation of Today's Trade News

No Deal

Yesterday, I commented No Deal: Trump Offers Zero-Tariff Deal, EU Refuses

The Washington Times reported "EU Trade Commissioner Cecilia Malmstrom, who will accompany Mr. Juncker to Washington this week, said they will bring a new list of U.S. goods targeted for sanctions if Mr. Trump doesn’t back down."

I created the image yesterday using a Tareyton ad from 1960's and an image of Jean-Claude Juncker.

Negati Net Benefits

I like this Tweet from Pater Tenebrarum (Acting Man) posted in response to the above article.

I will change his comment slightly to "No net benefits" or more precisely "Negative net benefits". There may be small benefits to a protected class but at a greater expense to to population at large. I am certain Pater understands that.

Retribution Cometh

It's an unsolvable problem.

Why?

  1. Because France will never give up its agricultural tariff policy.
  2. Bickering between France and Germany is on the rise. Germany is hurt far more than France over the auto squabble.
  3. This is not just a France-Germany issue. To make a treaty change, and tariffs are a treaty change, every nation in the EU must sign off on it. Re-read point number 1.

It took over a decade for the EU to negotiate a simple trade treaty with Canada. It nearly failed and took as long as it did because one country didn't like it.

Correction: I thought it passed when the Netherlands removed objections. The Italian election may have changed that verdict.

Reuters reports Italy won't ratify EU free-trade deal with Canada.

Here's the current situation. The EU signed the deal, but all 28 members must ratify it. The treaty is not valid until all 28 nations ratify it!

“We will not ratify the free-trade treaty with Canada because it protects only a small part of our PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) products,” Italian Minister Gian Marco Centinaio told the daily newspaper, La Stampa.

The government’s program pledged to “protect the highest-quality products of Made in Italy”.

Expect Out of Control Escalation

To expect Juncker will agree to remove all tariffs is like expecting vegans to suddenly condone baby back ribs.

Given the above, the most likely course of action is the trade war will escalate out of control.

Related Articles

  1. Trade War With China Morphs Into Currency War: Biggest Loser is the EU
  2. Trump Now Threatens Tariffs on All Goods from China: $450 Billion
  3. Chinese Tariff List Translated, 545 Items: US Farmers and Automakers Clobbered
  4. Trade War Hits Home: Trump's Asinine Protectionism

Trade Wars Unequivocally Bad

Trade wars are unequivocally bad and not easy to win.

No Matter What Any Other Country Does, the Correct Action is to Reduce Tariffs.

This morning, before the emergency "one-time" news came out, I commented Tariff Backlash Could Cost Republicans the Senate.

Trump's action shows concern that I may be correct.

Mike "Mish" Shedlock

Comments (28)
No. 1-25
ML1
ML1

The EU-Canada trade deal is still NOT guaranteed to pass because only about half of EU countries have ratified it so far so for example Italian populists 5 stars or League could still decide to stop it because they are apparently not happy that EU-Canada trade deal does NOT give naming protection to all foods that are naming protected under EU rules. Example Parma ham aka Prosciutto can be only ham made in Parma and not ham made the same way elsewhere like Parma ham is made in Parma.

ML1
ML1

It is 99% sure that it goes through but in EU one can be 100% sure only after each EU country's parliament has ratified what has been agreed. Also many EU countries use situations like this to get EU commissions ear about things that are important to them and get something they want through because it is easier to get Juncker's ear when some issue is still pending and EU commission needs something (like ratification of EU-Canada trade deal) from an EU country. . Some EU countries are naive honor students always doing quickly what Juncker or Merkel tell them to do and other EU countries take everything they can from EU.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

I am not sure this will ever be ratified. Take a look at the concerns of Italy expressed in direct quotes. I just updated my article in response to your correct observation.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Regardless, it shows how hopeless the situation is for Trump to expect Juncker to agree to anything. He can't. It would take a decade or more to form a deal. This is another example of why the UK needs to leave the EU.