Trump’s US-EU Deal 'Is the Final Nail in the Coffin of the WTO Model of Trade'

For as long as President Donald Trump has been advocating for increasing tariffs on imports, most economists on both the Left and Right have agreed that they are at best neutral and at worst catastrophic, since other nations would likely impose their own tariffs, triggering a trade war.

But the 10% global tariff the Trump administration imposed in April debunks both claims. There has been no trade war, the US economy kept growing, and the stock market rose.

The tariffs are indeed paid by Americans and thus contribute to inflation, and are, all else being equal, inefficient, and thus undermine economic growth.

But the contribution of Trump’s tariffs to inflation has been modest, economists agree, and in the real world, Europe and other foreign nations had far higher tariffs on the US than the US had on them, which makes abstract economic theories irrelevant. And if tariffs are so terrible, why have European and other nations grown wealthy imposing them?

And now, the new US-EU trade deal announced yesterday further disproves the assumption that tariffs would cause a trade war or even be reciprocal. Where the US will impose a 15% tariff on most European goods, a ten-fold increase from the current levels, Europe will impose zero tariffs.