There is nothing 'reciprocal' or ‘kind; about the 20% import tariffs Donald Trump announced on the EU.
Reciprocal tariffs
Reciprocity in trading is nothing new – it is a longstanding principle in international trade agreements. President Trump said last night "Reciprocal - that means they do it to us and we do it to them, it can't get any simpler than that." However, the reciprocity is not as straightforward as President Trump pretends.
The president also used a new term: the "discounted reciprocal tariff". The discount is the product of kindness on behalf of the US. On the whole, his administration would only impose tariffs at half the rate of what other countries apply to US exports. "We're being very kind,".
Is there anything "kind" about the 20% tariff that will be imposed on the EU?
EU Import tariffs
If we would accept the face value of the 39% EU import tariff on US exports from the chart that president Trump utilized, then perhaps there is some element of generosity at play.
The 39% however is a complete nonsense number. You will be hard pressed to find any credible estimate that puts the EU's average tariff rate on US exports anywhere near that level.
If you read the small print on the chart, you will notice that the calculations incorporate "Currency Manipulation and Trade Barriers". The administration has not released the methodology - other than to confirm suspicions they used a formula that divides a country's trade deficit by their exports.
The EU in 2024 exported $ 605.8 B of goods to the US and a had trade surplus of $ 235.6 B. Dividing the two you get the 235.6/605.8 = 39%. This 39% ratio has nothing to do with import tariffs.
While the EU does impose steep tariffs - exceeding 30% - on certain agricultural products like dairy, the weighted average tariff on American goods hovers around 3%.
Note that the EU had in 2024 a shortfall with the US on services of more than $ 110 B. Including the services the trade imbalance reduces significantly.
Conclusion
President Trump's 20% tariff on the EU neither ‘kind’, nor ‘reciprocal’.
With the import tariffs President Trump is starting a senseless trade war which will harm both the US as well as the world economy.
Trade wars have only losers and no winners.
Hopefully Republicans in congress and the senate will intervene and will put a stop to these self-destructing policies.
20% import tariffs on the EU – Neither ‘Reciprocal' nor ‘Kind’
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Petroleum economist
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Re: 20% import tariffs on the EU – Neither ‘Reciprocal' nor ‘Kind’
voodoo economics
I do recall President H. W. Bush using that term to describe Reagan's plans
didn't realize at the time we would see voodoo economics again
in a different form
a bit like his voodoo foreign policy
Make Russia Great Again
gravy brains Biden lowered the bar so low, people were so thirsty for leadership
they were willing to wander thru the desert and drink the sand
wow is the energy sector getting taken out behind the barn and shot today
at least cheaper gasoline prices are happening
I do recall President H. W. Bush using that term to describe Reagan's plans
didn't realize at the time we would see voodoo economics again
in a different form
a bit like his voodoo foreign policy
Make Russia Great Again
gravy brains Biden lowered the bar so low, people were so thirsty for leadership
they were willing to wander thru the desert and drink the sand
wow is the energy sector getting taken out behind the barn and shot today
at least cheaper gasoline prices are happening
-
Petroleum economist
- Posts: 377
- Joined: Wed Aug 23, 2023 7:01 am
- Location: The Netherlands
Re: 20% import tariffs on the EU – Neither ‘Reciprocal' nor ‘Kind’
The Republican party is waking up to the damaging tariffs.
WASHINGTON, April 3
Republican U.S. Senator Chuck Grassley introduced a bill on Thursday that would require congressional approval for new tariffs, the day after President Donald Trump unveiled sweeping new taxes on a vast array of imported goods.
Grassley, whose home state of Iowa relies heavily on the global agricultural trade, joined Democratic Senator Maria Cantwell of Washington for the "Trade Review Act of 2025" which would require Congress to sign off on new tariffs within 60 days of their imposition or automatically block their enforcement.
The move, made the day after four other Senate Republicans voted for a measure that would lift Trump's tariffs on Canadian goods, was the latest sign of dissent among Republicans as Trump's aggressive moves fanned recessionary fears and sparked Wall Street's worst day since 2022.
Neither Grassley's bill nor the measure that passed the Senate on Wednesday were seen as likely to become law while Trump's Republicans hold majorities in both the Senate and House of Representatives, where many of their members are voicing support for Trump's moves.
Trump, who has long advocated for tariffs, said that the highest U.S. trade barriers in more than a century would both raise federal revenue and drive manufacturing back to the U.S. Economists have voiced deep skepticism about both possibilities.
Grassley, the longest-serving member of the U.S. Senate, did not directly criticize Trump in introducing his bill. He noted that he had proposed a similar trade approach during Trump's first administration, citing the U.S. Constitution establishing congressional authority over trade issues, but that over time the legislature has ceded this power to the executive branch.
But some Republicans have indicated unease with parts of Trump's tariff plans.
"I would have expected more targeted tariffs to meet the needs of where countries are taking advantage of us, and perhaps a more modest approach in the amounts," Republican Senator Jerry Moran told reporters. He also expressed concerns that tariffs placed on U.S. allies in Southeast Asia were similar to those placed on China, which he called a "damaging" economy to the U.S.
Republican Senator James Lankford said he was surprised by the 17% tariff on Israel and hoped the U.S. Trade Representative could explain why the tariff level on Israel was different from other countries.
Republican senators Susan Collins, Lisa Murkowski, Rand Paul and Mitch McConnell -- the chamber's former Republican leader -- provided the votes on Wednesday to pass Democratic Senator Tim Kaine's disapproval resolution on the Trump trade approach toward Canada.
"Tariffs drive up the cost of goods and services. They are a tax on everyday working Americans," McConnell said in a statement on Thursday.
About half of Americans, and one in five Republicans, believe that increasing tariffs on imports will do more harm than good, a Reuters/Ipsos poll completed on Wednesday found.
The Republican critics in Congress of Trump's tariff moves remained a distinct minority. Indeed, the House earlier this month passed a measure meant to strip Congress' power to challenge new tariffs imposed by the president.
"The president has been talking about unfair trade against the United States for 40 years, so he's been very consistent on this," said Senator John Barrasso, the chamber’s No. 2 Republican. "Long-term, I think this is very important for the country, bringing jobs and manufacturing back to America, focusing on our economy."
Grassley's Democratic co-sponsor, Cantwell, said that Trump's tariffs risked long-term damage to the U.S. economy. "We can't afford a trade war that lasts for two or three years, leaving our product off the shelves," Cantwell said. "We cannot have arbitrary policies that create chaos and uncertainty."
WASHINGTON, April 3
Republican U.S. Senator Chuck Grassley introduced a bill on Thursday that would require congressional approval for new tariffs, the day after President Donald Trump unveiled sweeping new taxes on a vast array of imported goods.
Grassley, whose home state of Iowa relies heavily on the global agricultural trade, joined Democratic Senator Maria Cantwell of Washington for the "Trade Review Act of 2025" which would require Congress to sign off on new tariffs within 60 days of their imposition or automatically block their enforcement.
The move, made the day after four other Senate Republicans voted for a measure that would lift Trump's tariffs on Canadian goods, was the latest sign of dissent among Republicans as Trump's aggressive moves fanned recessionary fears and sparked Wall Street's worst day since 2022.
Neither Grassley's bill nor the measure that passed the Senate on Wednesday were seen as likely to become law while Trump's Republicans hold majorities in both the Senate and House of Representatives, where many of their members are voicing support for Trump's moves.
Trump, who has long advocated for tariffs, said that the highest U.S. trade barriers in more than a century would both raise federal revenue and drive manufacturing back to the U.S. Economists have voiced deep skepticism about both possibilities.
Grassley, the longest-serving member of the U.S. Senate, did not directly criticize Trump in introducing his bill. He noted that he had proposed a similar trade approach during Trump's first administration, citing the U.S. Constitution establishing congressional authority over trade issues, but that over time the legislature has ceded this power to the executive branch.
But some Republicans have indicated unease with parts of Trump's tariff plans.
"I would have expected more targeted tariffs to meet the needs of where countries are taking advantage of us, and perhaps a more modest approach in the amounts," Republican Senator Jerry Moran told reporters. He also expressed concerns that tariffs placed on U.S. allies in Southeast Asia were similar to those placed on China, which he called a "damaging" economy to the U.S.
Republican Senator James Lankford said he was surprised by the 17% tariff on Israel and hoped the U.S. Trade Representative could explain why the tariff level on Israel was different from other countries.
Republican senators Susan Collins, Lisa Murkowski, Rand Paul and Mitch McConnell -- the chamber's former Republican leader -- provided the votes on Wednesday to pass Democratic Senator Tim Kaine's disapproval resolution on the Trump trade approach toward Canada.
"Tariffs drive up the cost of goods and services. They are a tax on everyday working Americans," McConnell said in a statement on Thursday.
About half of Americans, and one in five Republicans, believe that increasing tariffs on imports will do more harm than good, a Reuters/Ipsos poll completed on Wednesday found.
The Republican critics in Congress of Trump's tariff moves remained a distinct minority. Indeed, the House earlier this month passed a measure meant to strip Congress' power to challenge new tariffs imposed by the president.
"The president has been talking about unfair trade against the United States for 40 years, so he's been very consistent on this," said Senator John Barrasso, the chamber’s No. 2 Republican. "Long-term, I think this is very important for the country, bringing jobs and manufacturing back to America, focusing on our economy."
Grassley's Democratic co-sponsor, Cantwell, said that Trump's tariffs risked long-term damage to the U.S. economy. "We can't afford a trade war that lasts for two or three years, leaving our product off the shelves," Cantwell said. "We cannot have arbitrary policies that create chaos and uncertainty."
Harry