President Donald Trump in meeting with the president of the European Commission in Turnberry, Scotland in
Andrea Shalal
At first glance, Donald Trump appears to be victorious in the World Trade War which he had triggered since his return to the White House last January.
The President has been complained about the United States of the United States and imposed large customs taxes on almost all imports to his will, reducing the American trade deficit and garnishing tens of billions of dollars a month to fill in the funds of the federal administration, which need it.
But important questions and obstacles remain, in particular concerning the respect of the promises of purchases of American products and investments in the United States formulated by trade partners, or the repercussions of customs duties on inflation, demand and American economic growth.
In January, on the day of the Inauguration of Donald Trump, the effective rate of American customs duties was around 2.5%. Since then, over the new taxes decided by the American president, he has climbed to around 17%-19%, according to a range of estimates.
This rate is expected to get closer to 20%, a peak for a century, with the new wave of so -called “reciprocal” American taxes entering into force Thursday on products from dozens of countries.
The trade partners of the United States has generally refrained from taking retaliation measures, allowing the global economy to avoid an even more intense trade war.
Data communicated on Tuesday shows a fall of 16% of the United States trade deficit in June, with the lowest deficit vis-à-vis China for over 21 years.
“Economic damage”
If American consumers have demonstrated more resilience than expected, certain recent economic data indicate that customs duties have already repercussions on the job market, growth and inflation.
“The question is, what is ‘to win’ means?” Said Josh Lipsky, director of economic studies at the Atlantic Council Center for reflection, whose headquarters are in Washington.
Donald Trump “notes customs duties for the rest of the world and avoids a war of commercial reprisals with even more easier than even he imagined, but the question is to know the effects on the American economy”.
In the eyes of Michael Strain, director of economic policy studies at the conservative think tank American Enterprise Institute, the geopolitical victories of the head of the White House could prove hollow.
“From a geopolitical point of view, Trump obviously obtains tons of concessions from other countries, but from an economic point of view, he does not win the trade war,” he said.
“What we see is that it is willing to inflict more economic prejudice to Americans than other countries are not ready to do so against their nations. And I see it as losing.”
Kelly Ann Shaw, former Commercial Councilor of the White House during the first term of Donald Trump, said to think that the solidity of the economy and the peaks of the financial markets argued “a more aggressive customs duties strategy”.
However, it will take time for customs taxes, tax measures and other policies implemented by Donald Trump to bear fruit.
“History will judge these policies,” said the one who is now a member of the Akin Gump Strauss Hauer & Feld cabinet. “But, in my lifetime, he is the first president to bring major changes to the global trade system”.
India and Brazil in the crosshairs
The White House has been sealed until now eight framework agreements, with the European Union, Japan, the United Kingdom, South Korea, Vietnam, Indonesia, Pakistan and the Philippines, fixing customs duties ranging from 10% to 20% on their products imported into the United States.
It is much less than the promise of “90 agreements in 90 days” repeated by representatives of the Trump administration in April, but these pacts represent a total of around 40% of trade flows in the United States. By adding China, currently targeted by customs duties of 30% and which is expected to obtain a new stay to avoid higher taxes this month, this percentage climbs almost 54%.
Donald Trump’s trade policy remained unpredictable, despite the agreements obtained.
He accentuated on Wednesday the pressure on India, multiplying in two – to bring them to 50% – the new customs duties having to target his products, accusing the country of importing Russian oil.
The American president also announced that 50% customs taxes will be taken from imports from Brazil, after complaining about the trial aimed at former Brazilian president Jair Bolsonaro, an ally.
Ryan Majerus, a lawyer specialist in trade who worked both for the Trump administration, during the Republican’s first mandate, and for the administration of former Democratic President Joe Biden, said that the announcements made so far did not answer “commercial questions anchored politically and for a long time” which disturb the decision -makers of Washington for decades.
To get there would probably take “months, if not for years,” he said.
He also noted the absence of a specific mechanism for verifying massive investments announced in the United States, including 550 billion dollars promised by Japan and $ 600 billion promised by the EU.
“Never tested”
The president of the European Commission, Ursula von der Leyen, was criticized in the community block for having sealed with Donald Trump, during a last minute meeting in Scotland at the end of July, an agreement providing for American customs duties of 15% on European products, without obtaining real concessions in return.
In Paris, the government deemed “unbalanced” the agreement between Washington and Brussels, Prime Minister François Bayrou even deploring a “submission”. President Emmanuel Macron deplored that Europe was “not fearful”.
European experts have put forward the fact that the decision of Ursula von der Leyen made it possible to avoid larger customs duties, while Donald Trump had threatened to bring them to 30%, and to calm tensions with the American president, dismissing the high tax spectrum in the automotive sector.
The promise by the European Commission for the purchase of American strategic products, for $ 750 billion, and investments in the United States, up to $ 600 billion, mainly has symbolic value. But experts and analysts have noted that it will belong individually to EU countries and companies to respond to these commitments.
Washington stressed that Donald Trump could again note the customs duties if he thought that the EU, Japan or other countries did not comply with their commitments. A vagueness remains on how it could be applied.
The past thus invites caution. China, with an economy funded by the State, has never fulfilled the modest promises of purchasing American products made within the framework of the so-called phase 1 trade agreement signed with the administration of Donald Trump during the first mandate of the latter. He was then difficult for the Biden administration to request accounts in Beijing.
“All this has never been tested. It is up to the EU, in Japan, to South Korea to determine the methods of implementation,” said Kelly Ann Shaw. “These are not only government purchases. The private sector must be motivated to make investments, or support loans, or get certain amenities.”
(Report Andrea Shalal, with the contribution of Ardee Napolitano to Paris, Clotaire Achi and Michaela Cabrera in Urville, Stephane Nitzschke, Andreas Kranz and Swantje Stein in Germany; French version Jean Terzian, edited by Kate Entringer)
