Editors at National Review Online assess President Donald Trump’s latest achievement in trade negotiations.
And so to the U.S./EU trade deal, which was, undeniably, a victory for the Trump administration, a victory that owed a great deal not only to the president’s negotiating style, but to Brussels’s acceptance that treating Donald Trump’s threat as a bluff was too great a risk to run. Economically, the U.S. remains the West’s indispensable nation, as, indeed, it is militarily.
To those who wrongly see trade as a zero-sum game, the result was a clear win for the U.S. …
… This deal is better seen as an armistice rather than a peace treaty, but a cease-fire comes with obvious geopolitical advantages at a time when Xi, Putin, and others are on the prowl. Its terms are also a useful demonstration of U.S. power, something to be celebrated but not too noisily. Our allies need us more than we need them. That does not mean we would be stronger without them.
Economically, the introduction of a modicum of certainty ought, if the armistice holds, to reap some economic rewards on both sides of the Atlantic. It will take some time to learn whether those rewards will outweigh the costs of this deal. In the long run, reduced competition from the EU concerns will, even if only at the margin, diminish the incentive for U.S. innovation and improved productivity. In the short term, this deal will also add to the tariff-driven price pressure that is already beginning to appear in the U.S. economy at a time when inflation is already running some way above the Fed’s targeted 2 percent. It takes an optimist to believe that consumers (including industrial consumers) will look at price increases in such an environment and conclude they are a one-off and nothing to worry about. There is an obvious danger that the result may be rising inflationary expectations, adding further weight to the argument that the Fed should keep interest rates where they are now.
