I have not posted for a while. Summer doldrums I suppose (although there is plenty of important stuff taking place as we all know). But a large part of it is I am finding it hard to get my head around how people are describing where we are vis a vis U.S trade and investment policy. I’ve been around for a while and I don’t consider myself naive about the way in which countries have always pressed for economic advantage over each other. Trump is breaking all the rules…true. But there are some things that are just not happening (I hope). Trump has claimed that Japan, the EU and others are literally paying him to lower his tariffs on them.
Is it that Trump and his trade gang just don’t get it? I suppose its possible that Trump doesn’t get it…but you would expect his gang to know better. So it’s got to be that they want to intentionally mislead.
Consider the following:
President Donald Trump is taking a victory lap over the foreign investment pledges he has secured as part of several recent trade deals, variously describing the multibillion-dollar commitments as a “signing bonus” and “seed money” and a “gift.”
“If you look at Japan, we’re taking in $550 billion and that’s like a signing bonus that a baseball player would get,” Trump said Tuesday on CNBC’s “Squawk Box.”
Of the European Union, he said, “They brought down their tariffs, so they paid $600 billion and because of that, I reduced their tariffs from 30% down to 15%.”
“They gave me $600 billion, and that’s a gift,” he continued. “They gave us $600 billion that we can invest in anything we want.”
Source: CNBC
And this…
President Trump’s tariff threats have turned into a play for cold, hard cash as he tries to leverage U.S. economic power to cajole other nations to make multibillion-dollar investments in order to maintain access to America’s market.
The president’s second-term trade agenda has clear echoes of his “Art of the Deal” approach, essentially demanding that trading partners show him the money in the form of investment pledges or else face astronomically high tariffs.
The financial promises give Mr. Trump the opportunity to flex his negotiating prowess in relatable terms and show off the splashy sums he is pulling into America, adding to the reality show intrigue of his trade agenda. As the Trump administration races to reach trade deals with dozens of countries ahead of a Thursday deadline, he has embraced a strategy that goes beyond opening international markets and reducing the U.S. trade deficit…
…To trade experts, the commitments raise the question of whether Mr. Trump is negotiating with trading partners or trade hostages.
“This is no doubt a global shakedown of sorts,” said Scott Lincicome, the vice president of general economics at the right-leaning Cato Institute. “The fact is that Trump is using U.S. tariff policy to effectively force these terms upon less-than-willing participants.”
Source: New York Times
And this…
But then, quite unexpectedly (because U.S. media have not been so great at digging into the issues) CNN puts this out.
Seventeen days ago, President Donald Trump made a dramatic claim in an interview on the business news channel CNBC. As part of his July trade agreement with the European Union, he said, the EU gave the United States a $600 billion present he could spend however he wanted.
“They gave me $600 billion. And that’s a gift,” he said. “That’s not like, you know, a loan, by the way. That’s not a loan that, oh gee, three years comes up, we have to pay it back. There’s nothing to pay back. They gave us $600 billion that we can invest in anything we want.”
A CNBC journalist said she appreciated the information, since they had been trying to figure out the details surrounding the $600 billion. Trump responded: “There are no details. The details are, $600 billion to invest in anything I want. Anything. I can do anything I want.”
Trade experts were highly skeptical of Trump’s claims, especially because the European side had said in July that the $600 billion figure referred to private-sector European companies’ “intentions” to invest in the US over time rather than some sort of lump-sum EU handout to the Trump administration. But it wasn’t possible to definitively debunk Trump’s narrative at the time of the CNBC interview, since the US and EU had not released an official joint text on what had been agreed between the two sides.
The two sides published a “framework” on Thursday. It’s brief and vague – but it shows there is no $600 billion gift.
Rather, the framework includes a clause that says this: “The United States and the European Union share one of the world’s largest economic relationships, supported by mutual investment stocks exceeding $5 trillion, and intend to promote and facilitate mutual investments on both sides of the Atlantic. In this context, European companies are expected to invest an additional $600 billion across strategic sectors in the United States through 2028.”
That doesn’t match Trump’s claim that the EU “gave me” a $600 billion sum to “invest in anything I want.” Justin Wolfers, a University of Michigan economics professor, said on social media on Thursday that Trump “didn’t get a penny” of the $600 billion “gift” he had claimed to receive.
Wolfers added in an interview with CNN that “there is no commitment; ‘expected to’ is not a commitment.” And he said the text makes clear that any money that does get invested won’t be handed to the president to control, as Trump had claimed, nor even given to the US government more broadly; instead, Wolfers said, it would be invested “by Europeans in whatever, presumably, Europeans want,” with the profits going to those Europeans.
Source: CNN
Finally someone gets it…
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