Trump trade deals prove access to the U.S. still matters above all else
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Illustration: Lazaro Gamio/Axios
In the Trump-dominated global economy, the U.S. gets plenty but gives nothing in return.
Why it matters: This is the reality of the asymmetric trade deals touted by the White House, which show how far foreign leaders will go to safeguard access to the U.S. market.
The big picture: Trump announced agreements with Europe and Japan in which both agreed to drop their tariff rates to zero, promised eye-popping investments in the U.S., and opened markets to American producers.
- In return, those countries get some assurance on their tariff rate — both 15%, and both of which could have been worse — even if it puts their industries at a disadvantage.
What they're saying: "Both Tokyo and Brussels apparently viewed the price of a 15% tariff worth paying in light of the alternative of higher tariffs, uncertainty and counter-retaliation," Wendy Cutler, former acting U.S. trade representative under Obama, tells Axios.
- The White House said that smaller nations — including Vietnam, the Philippines, and Indonesia — would also lower their tariffs and open markets to U.S. producers.
Driving the news: Trump announced the U.S.-EU deal on Sunday afternoon in Scotland, mere days before the White House was set to impose 30% levies on European goods.
The intrigue: European Commission President Ursula von der Leyen said the deal would bring the stability and predictability that global businesses need.
- Von der Leyen did not say what the U.S. conceded in the agreement when asked by a reporter.
- "I think we hit exactly the point we wanted to find — rebalance but enable trade on both sides," von der Leyen said in response to the question.
Between the lines: In return for that balance, Europe "gets no trade war," former U.S. ambassador to the EU Gordon Sondland tells Axios.
- It slims the odds of U.S. consumers shunning European goods, which could have been taxed at an even higher rate.
- "Without our market, very few industries would survive," Sondland says. "No one fully valued how much leverage our market creates when it comes to trade negotiations until Trump."
What to watch: The big unknown is how the asymmetric trade deals ultimately benefit the U.S.
- Opening markets benefits domestic producers only if foreigners are willing to buy — not always a sure thing, as with U.S. cars in Japan.
- Investments promised by the European Union and Japan will likely materialize over an extended period as well.
