With all the economic and political turmoil from the anticipated American tariffs, it may be tempting, especially for financially-oriented CEOs and billionaires looking at quarterly reports, to call the whole thing off even though doing so would deflate the American attempt to renegotiate trade bilaterally with other countries. The concerns of the wealthy, whether corporations or individuals, have their place, but arguably should not be allowed to "lead the proverbial dog from behind, lest the dog run in circles and get nowhere." Moreover, the notion that any goal that is difficult and takes some time to materialize can or even should be vetoed by momentary passions at the outset is problematic and short-sighted. That U.S. President Trump's announcement of bilateral tariffs quickly brought fifty countries to the negotiating table is significant as a good sign for the United States, as long as that country's powerful business plutocracy (i.e., private concentrations of wealth that seek to govern) can be kept from vetoing the emergent trade policy, which at least in part is oriented to trade negotiation and ultimately to the notion that fair trade is conducive to increased free trade.
As of 3:10 pm (CET) on April
7, 2025, the Euro STOXX 50 was down 5.27 percent, and the STOXX 600 lost 5.15
percent of its value. “The bloodbath is in full swing, and that’s exactly what
you see when you look at the European markets. There is no safe haven; equity
markets have entered a complete free-fall with no clear bottom in sight,”
according to Zaye Capital Markets.[1]
Meanwhile, the Dow Jones opened down 3.2 percent.[2]
“The sheer volatility was enough to spook CEOs on that rainy Monday in New York.
The Dow “briefly erased a morning loss of 1,700 points, shot up more than 800
points, then went back to a loss of 629 points.”[3]
The S&P 500 “likewise made sudden up-and-down lurching movements”.[4]
U.S. President Trump had “announced
a 20% across-the-board tariff on imports from the European Union, set to take effect
on 9 April,” with steel, aluminum and cars being subject to a separate 25% rate;
over all, over €380 billion in E.U.-made products could be affected.[5]
In that uneasy context, I
contend that two markers are worthy of attention, only one of which is arguably
productive. E.U. President von der Leyen
proposed to her counterpart, U.S. President Trump, that both unions cut their
respective tariffs to zero; essentially, there would be a free-trade agreement
on industrial goods. Just such an overture is in line with President’s intent that
other countries get rid of their unfair trading practices, which, the president
believed, had aggravated the U.S. trade deficits for decades. In this regard,
President von der Leyen’s proposal can be viewed as an overture, which could
lead to a counter-proposal that not only tariffs, but also non-tariff barriers of
the E.U. be removed (or that the E.U. compensate the U.S. for those annually).
Adam Smith’s ideal of
competitive free-trade rather than mercantilism presupposes trade that is free
even of non-tariff barriers so comparative advantage can be a major factor in
international trade. To be sure, national-security concerns are arguably legitimate
constraints on Smith’s ideal of competitive advantage. Being dependent on China
for computer chips would be risky for both the E.U. and U.S. because China
could hold either or both unions hostage as Taiwan is invaded by China with
impunity.
So von der Leyen’s response
was in “the right direction,” if free and fair trade was among Trump’s
goals in unilaterally imposing tariffs—that is to say, to the extent that the
announcement of tariffs was geared to triggering real negotiations.
That the billionaire hedge
fund manager, Bill Ackman, a supporter of President Trump, just one day earlier,
had “urged the president to pause his sweeping new tariffs, warning they could
economically devastate America if implemented, as planned,” can be likened to a
driver unilaterally letting some air out of his own car’s tires just before a
race.[vi]
Ackman may have been rich, but his intelligence was lacking in his assumption
that the tariffs would be permanent even though fifty governments were already
willing to negotiate on trade with the American government. Also, his understanding
of negotiation could have used a spare tire.
It is one thing for a republic to be an open society, and quite another for a dog to be led by its own tail, meaning for the U.S. Government to be led by greedy and short-sighted finance managers and CEOs of even major corporations. The enlightened self-interest of whom would be focused on the wealth that could be obtained from fewer trading obstacles in other countries, for the money that an American-based (and owned) company can possibly be made on exports from the U.S. is hardly nugatory. The capture of legislative and regulatory bodies by private companies and billionaires is a danger not only to democracy itself, but also to a country’s pursuit of its long-term strategic interests globally. A dog that is led by its hungry tail doesn’t get very far, and an argument can be made that such a dog doesn’t deserve to get very far, for weakness within a polity is hardly laudatory. Put another way, that elected offices in a republic have terms of years rather than, say, just a few months, is an important impediment to short-term passions in society seeking to get their way in policy. Sometimes long-term goals require momentary sacrifice even if the measures are erroneously assumed to be permanent rather than negotiating tactics.
1. Angela Barnes, “European
Markets Dive as Global Tariff Fears Shake Investor Confidence,” Euronews.com,
April 7, 2025.
2. Ibid.
3. The
Associated Press, “Stocks Are
Making Wild Swings as Markets Assess the Damage from Trump’s Trade War,” Apnews.com,
April 7, 2025.
4. Ibid.
5. Jorge Liboreiro, “Von
der Leyen Offers Trump ‘Zero-For-Zero’ Tariffs Deal on All Industrial Goods,”
Euronews.com, April 7, 2025.
6. Lee Moran, “Billionaire
Trump Backer Warns America of ‘Self-Induced Economic Nuclear Winter.” The
Huffington Post, April 7, 2025.
2. Ibid.
3. The Associated Press, “Stocks Are Making Wild Swings as Markets Assess the Damage from Trump’s Trade War,” Apnews.com, April 7, 2025.
4. Ibid.
5. Jorge Liboreiro, “Von der Leyen Offers Trump ‘Zero-For-Zero’ Tariffs Deal on All Industrial Goods,” Euronews.com, April 7, 2025.
6. Lee Moran, “Billionaire Trump Backer Warns America of ‘Self-Induced Economic Nuclear Winter.” The Huffington Post, April 7, 2025.
