Trade

Trump’s tariff setback – and what it means for Europe

Donald Trump likes to call himself “Tariff Man” and even “king”. But on 20 February, the US Supreme Court ruled that his use of particular emergency powers to “unilaterally impose tariffs of unlimited amount, duration and scope” on all and sundry was illegal.

That setback throws much of Trump’s trade strategy into chaos, deprives him of his favourite form of geopolitical leverage and constrains his freedom of action going forward. He is not, after all, an absolute monarch when it comes to commerce.

The justices’ ruling also casts doubt on the many trade agreements that are premised on Trump’s unilateral tariffs – not least his one-sided deal with the EU that was struck at his Turnberry golf course in Scotland last August.

But while the Supreme Court’s willingness to stand up to Trump is good news – not least for Americans worried about their country’s accelerated slide into authoritarianism – it does not prevent Trump achieving his protectionist aims by other means. Indeed, if it prompts Trump to lash out and other countries to retaliate, it might even end up making matters worse.

Read my article for Brussels Times.

Europe needs independence from Trump’s America

The storm over Greenland may have abated for now, but Europe’s relations with Donald Trump remain grim.

Europeans need to face facts: they cannot rely on the mercurial US president to protect them from Russia; indeed, he too poses a threat.

Now, then, is the time to accelerate plans to reduce Europe’s military, economic and technological dependence on Trump’s America and to build new partnerships with like-minded powers.

Read my latest Brussels Times column.

Why the EU isn’t a superpower yet

Trump and Putin negotiating Ukraine’s future without consulting Europeans; the EU capitulating to Trump on trade; European factories choked by China’s rare-earth curbs:

Now that global decisions are increasingly dictated by hard-power realities not technocratic rules, the once-mighty EU suddenly seems like a paper tiger.

Read my latest column for Brussels Times, which analyses the EU’s four big vulnerabilities and sets out what it needs to do to become a superpower.

Nonsense on wheels

The FT has published my letter demolishing the nonsense argument by Jason Cummins and the Trump administration that EU VAT gives European exporters an unfair trade advantage.

Cummins claims that it is unfair that BMW does not pay EU VAT on its exports to the US, whereas General Motors must pay VAT on its exports to the EU.

But BMW cars sold in Europe face exactly the same VAT rate as GM ones exported from the US.

Similarly, BMWs and Cadillacs sold in the US face identical state and local sales taxes, and neither pay EU VAT on their US sales.

Cummins ignores the true lack of reciprocity: that the EU levies a 10 per cent tariff on car imports whereas the US levies 2.5 per cent on cars and 25 per cent on light trucks. Equalising all of those at 2.5 per cent would make sense.

Regrettably, Trump has instead announced a 25 per cent tariff on all car imports from April 3. That is “unfair” and “discriminatory”, not EU VAT.

What does the future hold for international trade?

Unprecedented uncertainty hangs over international trade. While markets and multinationals are—understandably—fixated on the immediate prospects for trade relations between the US and China, far bigger long-term questions cloud the future. This is often simplistically framed as a binary question: is globalisation set to go into reverse? Or more politically, are the US and China heading for a new Cold War? But in practice, the future pattern of international trade could take many different forms over the next decade or two.

Read my foresight piece for the Oracle Partnership