Trump's new trade order will be fragile
By imposing tariffs on Japan and Europe without compensation (and without triggering a trade war), Donald Trump appears to have achieved his goals. Other countries could offer concessions or face tariffs starting August 1. But these hard-won agreements lack the strength or legitimacy of the system they seek to supplant, warns this Wall Street Journal columnist.
Donald Trump has accomplished a feat: raising tariffs even higher than the disastrous Smoot-Hawley Act of 1930, while (it seems) avoiding triggering a disastrous trade war like it.
Taking into account the agreement signed last weekend with the European Union (EU), the United States will now impose an average rate of 15% on its trading partners. By far the highest rate since the 1930s, according to JPMorgan Chase.
Japan and the EU have also committed to investing a total of $1.15 trillion in the United States, and Europe in energy and military purchases.
And what did the Americans give in return? Nothing.
Trump has therefore achieved his objectives, at least for now. But this does not mean that a new world trade order has taken shape with these agreements. They are only a step forward, and lack the solidity and legitimacy of the system they are replacing.
The method could not have been more Trumpian. The American president believed that others had more to lose than the United States in a trade war. And he took them down one after the other, making it clear that refusing a deal on one's own terms was
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