European indignity in the face of Trump's deception

7 min read JUAN TORRES 0 comments

JUAN TORRES

The President of the European Commission, Ursula von der Leyen, and the President of the United States, Donald Trump, have just staged a truly shameless piece of theater.

As he has done with other countries, Donald Trump has not sought a favorable trade agreement with the European Union for the interests of the US economy, as he insists. And what von der Leyen has conceded on is not on tariffs to avoid the greater evils of an escalating trade war, as European leaders claim. The matter is moving in a different direction.

The 15 percent tariffs agreed to on almost all European exports will be paid by Americans, and in some cases, at even higher indirect costs.

This will happen, among other products, with pharmaceuticals, which are affected. Since there is no alternative domestic production in the United States and purchases are generally compulsory (economists say there is very low price elasticity of demand), consumers will end up paying higher prices. Assuming that it were possible or interesting for companies to relocate to the United States to produce (which, of course, is far from clear), it would be in the medium term (I explained it). in a previous article).

Tariffs on European cars will be 15 percent, but US manufacturers must pay another 50 percent on steel and copper, and 25 percent on components they purchase from Canada and Mexico. It would therefore be possible for cars imported from the European Union to be cheaper than those made in the United States, and for US manufacturers to be better off producing them in Europe and shipping them back. Furthermore, most European-brand cars sold in the United States are made there, so they will not be affected by the tariffs, while hardly any American cars are sold in Europe, not for commercial reasons but rather for cultural or taste reasons. Other products in which Europe has advantages, such as those related to the aerospace industry and some chemicals, agricultural products, natural resources, and raw materials, will not be affected.

In reality, in terms of the export and import of general goods, the "agreement" is not favorable to the United States. As Paul Krugman explained a few days ago in an article entitled The art of the really stupid deal, the one signed with Japan (and exactly the same can be said now of Europe and all the others) "leaves many American manufacturers worse off than before Trump started his trade war."

However, all this doesn't mean that Europe has benefited. Trade wars are rarely won, and many European companies and sectors (the Spanish oil and wine industries, for example) will be negatively affected. But they won't lose because Trump is seeking to reduce his foreign trade deficit, but rather as a side effect of another, even more dangerous strategy.

The reality is that it's not in the United States' interest to reduce it because this deficit, by definition, generates surpluses and savings in other countries, which return as financial investments to the United States to fuel the business of big banks, investment funds, and large multinationals, whose investments aren't used to invest or locate there, but rather to buy their own shares. The U.S. economy's external deficit isn't a disaster, but rather a deliberately induced result to build a financial and speculative business of colossal magnitude on it.

What the United States truly seeks with trade "agreements" is not to eliminate imbalances through tariffs. That is something that has practically never been achieved in any economy. The real objective of the United States is to blackmail and extract rents from other countries, forcing them to buy from the oligopolies and monopolies that dominate their energy and military sectors and, in addition, humiliate and subdue them in order to later accept the changes to the international payments system that it is preparing in response to the decline of the dollar as the global reference currency.

In the "agreement" with the European Union (as in the others), what's relevant isn't even the amounts that have been made public. The tariffs are an excuse, a decoy, a weapon for blackmail. What truly matters to Trump isn't the egg that has been distributed, but the jurisdiction he has just established. That is, the coercion, subjugation, and monopoly of will that are now formally established as the new norm of governance and dominance of the global economy, and which the United States needs to impose, now through financial and military force due to its decline as an industrial, commercial, and technological power.

Given that Donald Trump is a great negotiator, if he wanted to achieve real trade advantages for his economy, he wouldn't have signed what he "agreed" with Europe (and other countries), nor would he have left its most significant aspects up in the air and unspecified. The amount of US military equipment purchases hasn't been specified: "We don't know what that figure is," he said when staging the agreement with Von der Leyen. The commitment to purchase $750.000 billion in US energy products over three years could only force Europe to divert a portion of its purchases, and it doesn't seem to have been sufficiently specified either. And the obligation to invest $600.000 billion in the United States is a pipe dream because the European Union lacks instruments (like Japan's sovereign wealth fund) that allow it to direct investments at will and from one place to another. Furthermore, establishing this latter obligation would be another absurdity if what Trump truly wanted was to reduce his trade deficit with Europe: if European investment there increases, European purchases from the United States will decrease, and the resulting deficit would be larger, not smaller.

What Von der Leyen and Trump have done (in Scotland, by the way, and not even on European soil) is strip naked in public. They've put on a show, pretending to negotiate trade clauses, but in reality, they've stripped off the clothes of demagoguery and rhetorical speeches to show the world their shame, manifested in five major realities:

The end of the rule of the global economy and international trade through rules and agreements, and the beginning of a new regime in which the United States will decide without any dissimulation, based on blackmail, imposition, and military force.
The United States won't mind causing serious damage, instability, and a sure crisis in the international economy to launch this new regime. Perhaps it will even seek it out, just as it will seek conflicts to justify its military interventions.
The European Union has submitted, kneeling before American power, and renouncing any kind of autonomous project. As I said, Trump hasn't cared about anything, but rather about showing that Europe no longer makes strategic decisions on its own in three major pillars of the economy and geopolitics: defense, energy, and investment (in technology, it has long since lost its way and the possibility of being significant in the global arena). Von der Leyen, with the approval of a European Commission that includes not only the various right-wing parties but also the Social Democrats (which must be taken into account to understand the scope of the "deal" and how difficult it will be to leave it), has accepted that the European Union will be, de facto, a colony of the United States.
Both sides have shown the world that the old rhetoric about markets, competition, free trade, democracy, sovereignty, and peace was what we now see it to be: smoke in the wind, a fraud, a big lie.
Finally, they have also shown that capitalism has become a kind of grand game of Monopoly, ruled by large industrial and financial corporations that have captured states to become extractors of privileges, a kind of gigantic landlords who squeeze their tenants by constantly increasing their rent while forcibly preventing them from leaving and talking to them about freedom.

The European Union has condemned itself. It has said goodbye to the possibility of being a global hub and benchmark for democracy, peace, and multilateralism. Now it's necessary for people to realize all this and reject it, which won't be easy, because these monopolies are joined by the media monopoly, and because, as I said, this immolation of Europe has been carried out not only by the right, but also by the European socialists who, once again, betray their ideals and join forces with those who shamelessly deceive the citizens who vote for them.