this post was submitted on 05 Apr 2025
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Are they pulling some good cop bad cop play? Musk saying he wants free trade like it used to be, Trump willing to do that if we accept his super attractive deal?
So, one thing I've seen proposed is basically that Trump's goal is to use the tariff increases as a negotiating ploy.
This is not, I suppose, completely unthinkable, from a purely-economic standpoint. That is, hypothetically one could say that a zero tariff trade agreement is preferable for the EU to a whatever-Trump-is-going-to-be-imposing scenario, but that remaining barriers to trade are the politically-sensitive ones that are unlikely to be removed, so getting to a zero tariff agreement from the status quo is difficult. If that's true, then the right move from a US administration that does want a zero-tariff agreement is to make the choice one between high tariffs and no tariffs, to yank the status quo off the table.
I'm sure that there are more-informed-on-specifics takes that will show up if that's the direction that the administration goes.
What I have a very hard time seeing is how this would work on the political side. Like, Trump has whipped up protectionist sentiment in the US, and done a lot to antagonize trade partners. If you create a trade agreement, you're going to have to have to go tell existing businesses that they are going to go under, as the economic environment changes. That's politically hard to do. In such a scenario
assuming that non-tariff barriers to trade also go away, which is something that it looked like Trump was trying to account for in his tariffs
Trump would have to go back to people like uncompetitive US manufacturers and tell them that they'd have to go under for the good of the US economy. Those also tend to be in swing states that he relied upon. Officials in the EU would have to go to, say, uncompetitive EU farmers and tell them the same, and the existence of the CAP, I think, demonstrates that that's quite politically-sensitive. And they'd have to be doing that in a situation where they're cutting a deal with an unpopular Trump.
If that's what the Trump administration is actually aiming for, though, I suppose that it'll become visible pretty soon, since it'll start trying to negotiate trade agreements.
What I do not get is how they thought reaction would be? "all other countries" just bending over?????? especially after annextion threats????