The tactics and numbers behind what was, by any measurement, a Master Class in dealmaking from Donald Trump.
The Establishment press beyond the US is this morning celebrating “a surprise zero tariffs agreement” following “President” Junker’s visit to the White House. The MSM are surprised by the deal because they (as always) underestimate Trump, the tariffs are only partly going back to zero, and the tariffs that remain at zero have still to be negotiated. And to get even to that stage, J-C J has had to buy a mountain of US agricultural surplus that Europe doesn’t really need.
In the US itself, it is variously being depicted as a retreat by Trump, a climb-down or dangerously impetuous brinkmanship. This is because the US Leftlib tendency knows nothing about deal-making.
Time to examine how Donald Trump played this tariffs saga, where this deal now leaves the EU, and what lessons can be learned for the next “stage” haha of Brexit negotiations.
Trump felt his country’s trade relationship with the EU was weighted heavily in the latter’s favour. He was right: in the latest year’s figures*, The EU had a €120 billion trade surplus with the EU:
Expressed as surplus on turnover, that is a trade margin of 22%.
So Trump decided to renegotiate it. First of all he told the EU NATO States to unzip their pockets and cough up more for defence “against Russia”. Then he unilaterally stated an intention to slap 20% trade tariffs on a massive range of EU imports…all of them the big players. Shock, horror, disgust and outcry in Europe. Not surprising, given that the products Trump chose were all biggies:
Nearly 55% of a €600 billion trade turnover for the EU was at severe risk of being cut by tariff-based price increases. For Germany, Spain and Poland, that would’ve been catastrophic.
So, after his hard-headed trade diplomats have gone head to head with Brussels, Trump agrees to suspend (not cancel) the tariffs on non-automotive products but sticks rigidly to the protection of Motown jobs. Mightily relieved, the European Commission agrees, and Juncker steps up (this time without falling over) to receive the accolade.
Jean-Claude goes home to a hero’s welcome in the media, and a very sour-faced sausage addict in Berlin. Trump gets everything he wants, is applauded by blue-collar auto workers, and still makes the Commission negotiators work their butts off just to stay put at maybe, net, 12% down on where they were a year ago. And if he doesn’t get the NATO result he wants, he retains the option to turn nasty again at a later date.
That, dear reader, is how to negotiate with the EU. It is what the May Cabinet and Olly Robbins have never tried to do, because they never wanted Brexit in the first place.
Now go back to the angry little DDR Jugendfuhrerin in the Chancellery. She is angry because Merc, BMW, VW and Audi are going to have to lay workers off in the light of a drastic falloff in US demand. A very large number of their high margin vehicles are sold tariff-free to the UK: Britain is the top EU importer of luxury German motors.
The blindingly obvious ‘no deal’ Brexit threat Britain should make to the EC in Brussels immediately is a 25% tariff on all EU cars above a certain price plus a specific additional eco-tax on vehicles achieving more than a given level of emissions – and fewer miles per gallon consumption – than a bar we set.
That would change the game and get the Brexit for which I and 17.4 million others voted.
But the game is already won: the Brexiteers have been summarily deposed by a Prime Minister with all the sensitivity of a foundry jack-hammer, and an unelected Whitehall power-broker playing for the other side.
Where are the action groups? Where is the outcry? Where are Johnson and Davis? Where is UKIP? And above all, whyTF does Nigel Farage think turning a shilling in the Antipodes is more important than the country whose genuine independence he has always claimed to put first?
We have been let down, betrayed and left defenceless by all sides in this sorry mess. It is now up to us. I’m 70 years old and knackered: my best weapon is the pen. Is there a sword bearer in the House?
* All the stats quoted here are from the European Union website on trade.