Here is the lesson of President Donald Trump’s sudden decision Wednesday to call a truce in his trade war with the European Union: Pushback works.
As recently as Tuesday, Trump seemed committed to escalating the tariff war he started with Europe on June 1 by implementing steel and aluminum tariffs on that 28-nation confederation. The E.U. retaliated on June 22 with levies on iconic U.S. goods such as bourbon and Harley-Davidson motorcycles — and Trump raised the ante by threatening a 25 percent tariff on European auto imports.
All the while, he pursued tariffs against other trading partners such as Canada, China and Mexico, which were striking back against U.S. agricultural and industrial goods produced in heartland states where Republican senators and members of Congress face difficult midterm elections. It did not help Trump’s cause that U.S.-based auto manufacturers who would purportedly benefit from tariff protection did not want it — and said so loud and clear. The administration’s proposal to hand farm country a $12 billion trade-war bailout also fell flat, with Republican senators chorusing their opposition.
With U.S. industry, U.S. agriculture, long-standing European trading partners and members of his own party all telling Trump to cool it, he did something he rarely does — listen. The “deal” the president trumpeted on Wednesday in the company of European Commission President Jean-Claude Juncker was his face-saving off-ramp. It amounts to little more than a mutual promise to talk about reducing trade barriers on both sides of the Atlantic, and to impose no new ones in the meantime.
Tariffs on industrial goods other than autos would be targeted for elimination. Europe embellished it with a pledge to buy more American soybeans, thus offsetting China’s tariffs on that product, and to import more U.S. natural gas in the distant future. Considering that the negotiating agenda Trump and Juncker sketched resembles the Transatlantic Trade and Investment Partnership that President Barack Obama tried to launch with Europe, you could almost say that all Trump has to show for his trade war with the European “foe” is a return to his predecessor’s policy, plus some beans.
Still, this is a positive development, because a negotiated mutual opening of markets would benefit the U.S. economy, if indeed Trump’s team can make it happen; because it avoids a worsening of global tensions; and, last but not least, because Trump did, however reluctantly, resist his worst instincts. We hope that some of the new pragmatism infuses talks on salvaging the free-trade agreement with Canada and Mexico.
Caveats apply: On May 20, Treasury Secretary Steven Mnuchin put a trade war with China “on hold,” only to have the president resume it less than two weeks later. The same thing could happen with Europe. Also, before his deal with the E.U., Trump badly and possibly lastingly damaged international trade norms, especially by putting “national security” in play as a rationale for ordinary protectionism.
This points to the lingering structural problem in U.S. trade policy: Congress’ delegation of too much easily abused tariff-raising power to the president. Republican pushback will really have meaning when it produces legislation to take away some of the president’s discretion in such matters.
FROM AN EDITORIAL IN THE WASHINGTON POST