Donald Trump has always maintained that trade wars are easy to win
. The first six months of his second term show that they are not even easy to start. In addition to the new 10% universal tariff
on all exports to the US, on April 2nd – Liberation Day
– President Trump ordered aggressive reciprocal tariffs
against some 60 countries, only to immediately postpone them for three months when the first worrying tremors hit the stock, debt, and dollar markets.
One month, ten agreements
To reassure Wall Street, the White House promised 90 agreements in those 90 days, offering a discount on reciprocal tariffs
to the threatened nations in exchange for concessions, such as the purchase of US arms and energy, commitments to heavy investment in the United States, and greater market openness to American goods. By the end of June, however, only the United Kingdom had concluded such an agreement, and Trump opted to extend the truce for another month, until August, sending out different versions of the same letter to two dozen countries, large and small. In addition to reviving the Liberation Day
tariff threat with few changes, the poorly written letter promised mirror-image retaliation to any counter-measures, i.e., a protectionist escalation against anyone who thought of responding to tariffs with tariffs. Further measures were threatened against goods with which countries attempted to circumvent US protectionist barriers by passing through third countries, via so-called trans-shipment – widely understood as an anti-Chinese clause.
The US government's show of strength was met with little resistance. By the end of July, the Trump administration was able to count the spoils of a dozen asymmetrical agreements, including with global trade players such as the EU, Japan, South Korea, and Vietnam. Finally, on August 7th, the reciprocal tariffs
without concessions came into force for countries such as Canada, India, and Brazil, which had not reached an agreement with the White House.
Tariffs for all
The fog of war, postulated by General von Clausewitz for every conflict, also envelops Trump's tariff battlefield, thickened by his chaotic methods of action and communication. As the first six months of his second term come to a close, it is premature to draw even preliminary conclusions about the trade conflict and impossible to make a complete assessment, but three general observations can be made.
First, there is an increasingly clear break with the previous term. This time, tariffs on exports to the US are increasing significantly and universally: by 15-20% for those who strike agreements with the White House, double that for China and those countries that do not reach an agreement, with a 10% universal tariff
for all other nations. Added to this are heavy sectoral duties on steel, aluminium, copper, automotive, and other goods that have been announced.
Treasury Secretary Scott Bessent's early claim now looks false: that Trump is basically a free trader
, a liberist who uses tariffs only as a negotiating weapon: escalate to de-escalate
. The march has proceeded three steps forward and two steps back, amid daily assaults and retreats, but with a consistent direction over the months. The WTO and IMF estimate that average US tariffs have increased tenfold, from 2.44% in January to 20.11% in August. From this point of view, according to Greg Ip, chief economics commentator for The Wall Street Journal, Trump has, by his own definition of success, already won his trade war
.
Disunited nations
A second aspect to note is that Trump's offensive is broad, but not indiscriminate. On the anti-China front, after a brief reciprocal embargo with triple-digit tariffs that had spread panic on the financial markets, the White House backtracked. In May it negotiated a three-month truce, with tariffs at 30%, which was quietly renewed on August 11th for another three months. Mexico also received a three-month postponement of reciprocal tariffs
, while those already in force exempt goods that meet the domestic content requirements of the USMCA North American free trade area, and the same applies to Canada.
It is unclear what this means in quantitative terms, given the confusion of announcements and denials. On a political level however, our hypothesis that a decades-long strategic achievement such as the NAFTA regional market would not be squandered with impunity seems to have been confirmed. Finally, it is premature to assess the option that has been circulating for months – of a multilateral united front
against the US tariff offensive, either in the bold formula of a WTO without the US
, or in the proposal for convergence between the EU and the large Trans-Pacific Partnership (TPP) group, relaunched by Ursula von der Leyen at the end of June. As we note elsewhere, the debate on options for a strategic defence of multilateral relations is growing in Japan and in India, while the agreement between the German and Japanese foreign ministers on supply chains for semiconductors and critical materials appears to be a first practical translation of the Von der Leyen-Ishiba agreement.
Trump has behind him all the economic, financial, monetary, and military power of the United States, which is certainly not facing its relative decline unarmed. With shameless blackmail tactics, he is imposing a bilateral negotiation scheme, dividing the rest of the world
and managing to impose tariffs and agreements that break both the law and the spirit of the multilateral system. Several experts have argued that, in this way, the US has already effectively left the WTO. It should be noted, however, that the Trump administration has so far wanted to avoid a sensational official break, which would certainly increase the intensity of the crisis in the world order by a few degrees.
As mentioned above, many agreements are still mere memoranda of understanding. Elsewhere in this newspaper, we provide a general political assessment. While waiting for a clearer picture that allows a substantive review, we have selected what we consider to be the most significant comments on the agreements between the US and the EU and between the US and Japan, from the enormous amount of commentary available, reflecting three perspectives.
The most polemical view, prominent in the immediate reactions, is that Europe had its Canossa
moment on the golf course at Turnberry, Scotland, humiliated by Trump's blackmail of 15% tariffs, preceded a few days earlier by a similar agreement between Washington and Tokyo.
According to a middle-of-the-road interpretation, both agreements saved what could be saved, preventing retaliatory measures from plunging the trade war into a protectionist spiral, as was the case in 1930, when 25 countries responded to the Smoot-Hawley Tariff Act promulgated by Herbert Hoover, causing international trade to collapse by 66%.
Finally, a third line of thinking sees the proverbial glass half full in comparison with other, much more punitive outcomes and, above all, in the assessment of what has not been included in the agreements, thus averting more serious strategic consequences. Here, if confirmed, it would be revealing that the memoranda drawn up with both Tokyo and Brussels do not contain explicit clauses against Beijing, showing an underlying resistance to the American attempt to coerce an anti-Chinese front
.
European “Canossa” and American triumphalism
Mario Monti, former EU commissioner for competition and former Italian prime minister, LA STAMPA, July 31st.
The EU has lost; it needed more courage. The golf course is Ursula's Canossa;There are two and a half areas in which, over time, the Union has made a leap in the granting of power. One is not managed by the Commission, but by the European Central Bank. The other one and a half are managed by the Commission: competition policy and, I repeat, international trade, especially the issue of tariffs. For my part, I feel a certain sadness: we have lost the opportunity to make proper use of a quasi-federal policy instrument.
GLOBAL TIMES, August 11th.
Brussels has acted like a sluggish giant when facing unilateral tariff bullying [...] Brussels must realise that short-sighted compromises, scapegoating others, and sacrificing others' interests in exchange for pity will not protect its own interests, nor will it earn international respect. They will only isolate the EU further. Political courage and decisiveness to bear short-term confrontation risks are crucial steps toward achieving genuine strategic and security autonomy for the EU.
Handelsblatt, August 4th.
The self-proclaimed ‘Geopolitical Commission’, led by Ursula von der Leyen, has left behind what is perhaps the worst humiliation in the history of the European Union.
Jamieson Greer, US trade representative (USTR), The New York Times, August 7th.
President Trump uniquely recognises that the privilege of selling into the world's most lucrative consumer market is a mighty carrot. And a tariff is a formidable stick [...] In a few short months, the United States secured more foreign market access than it had in years of fruitless WTO negotiations [...] Many of these deals also come with significant investment commitments into US productive capacity, [...] 10 times larger than the inflation-adjusted value of the Marshall Plan that rebuilt Europe after World War II.
The least worst
Éric Lombard, French minister of economy and finance, Libération, July 29th.
Faced with this offensive, Europe had to make a choice between bad solutions. This is a bad agreement, but the least worst solution. [...] When you have responsibilities, you practise Realpolitik. The United States has involved us in a game that no one wanted to play. [...] What companies are asking of us is stability.
Peter Leibinger, president of the German Federation of Industries (BDI), Handelsblatt, July 29th.
We were, and are, weak. We depend on the US for defence, and over the last 15 years we have fallen far behind them economically. We must now finally put both defence and the economy back in order within the EU [...] Fundamentally, the EU has acted correctly. I consider the Commission's strategy to have been the right one: to persist until the end in seeking solutions through a rational dialogue and in avoiding escalation.
THE WALL STREET JOURNAL, July 29th.
The US and Europe stepped back from the brink of a trade war [...] The US President gets his beloved 15% tariff but little else from Europe.
Raja Mohan, interview with the Institut Montaigne, August 6th.
Nothing lasts in politics [...] Trump's power depends on a slim majority in both the Senate and Congress. Will this majority survive beyond the midterms? It is unlikely. The current political moment in America could be – without any doubt – just a passing fad. MAGA wants to demolish the administration – the “deep State” – but resistance is strong and the dissent we are already seeing will only increase. All we can do is let the internal situation in the United States fester and wait.
Europe's cards
Adam Posen, president of the Peterson Institute, Frankfurter Allgemeine Zeitung, July 31st.
Europe's Way Out of US Domination:EU negotiators acted sensibly in concluding the agreement with the Trump administration and avoiding retaliation. Europe's path in the international economy is to play its own game. This means that Europe must now make the most of the opportunities offered by the US withdrawal and China's unreliability [...] Attempting to compete directly with China and the US in terms of economic bullying, subsidies and exploitation of national security relations would be a costly failure for the EU [...] The US withdrawal from globalisation is bad for both the US and the world as a whole. Europe, on the other hand, might relatively benefit from the outcome for the global economy.
The Economist, July 31st.
The EU secured a few, subtler wins. It kept Mr Trump's hands off its value-added tax, which the American president hates, because he wrongly thinks it disadvantages his country's exporters. The deal said nothing about the EU's right to tax and regulate digital services, many of which are of American origin. Nor did the deal dictate how Europe deals with China [...] Should America make new, more onerous demands, the EU may set aside caution and retaliate against the bully that does not fear it enough. In this negotiation, it has accepted the limits of its power. In the next round it might be Mr Trump's turn to learn his.
Handelsblatt, August 4th.
But if Europe uses the breathing space it has now gained to become more independent militarily and economically, the EU could return to imposing fairer trade relations within a few years, for example by adopting a digital tax. ‘Then perhaps in five years’ time people will say: those Europeans were crafty’, hopes a senior diplomat. ‘They protected Ukraine and kept the US in NATO. They accepted a necessary evil in the short term, but in the long term they shifted the burden of tariffs onto the Americans’.