Tariffs as a Negotiating Tactic: Undercut by Wall Street Expediency

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.

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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.

On the Role of Agribusiness in Global Warming

Agriculture is a major source of carbon and methane emissions, which in turn are responsible for the general trend of the warming of the planet’s atmosphere and oceans. In fact, agriculture emits more than all of the cars on the roads. 10 percent of the emissions carbon dioxide and methane in the U.S. come from the agricultural sector. Livestock is the biggest source of methane. Cows, for example, emit methane. Methane from a number or sources, including the thawing permafrost, accounted for 30 percent of global warming in 2023. As global population has grown exponentially since the early 1900s, herds of livestock at farms have expanded, at least in the U.S., due to the increasing demand.[1] We are biological animals, and we too must eat. More people means that more food is needed, and the agricultural lobby in the U.S. is not about to let the governments require every resident to become a vegetarian. Indeed, the economic and political power of the large agribusinesses in the U.S. have effectively staved off federal and state regulations regarding emissions. It comes down to population, capitalism, and plutocracy warping democracy.

In the early 80s, the farm lobby in the U.S. “began to get concerned about environmental regulations” and made sure the FDA would not regulate American farms.[2] The EPA has delegated permits to the States, but they have been “uneven in issuing permits. In 2009, a law barring the EPA from applying clear air regulations to livestock” took effect.[3] The agriculture lobby has thus been “extremely effective.”[4] This has been so even in spite of the Paris Agreement reached in 2016, and the steadily increasing average global temperatures. A U.S. Government-sponsored report admits that increased demand/consumption of meat impacts climate change, which in itself is interesting given all the political donations and lobbying by the agribusiness companies in the U.S., but the report concludes that people in developing countries should eat less meat.[5] Apparently Americans are uniquely privileged to die of heart-disease. Perhaps the hospital lobby wants to encourage more business thanks to third-party payors.

The figures on the political contributions and lobbying by agribusinesses (and oil companies) are mind-blowing. For instance, American agribusiness spent a record $165 million on federal lobbying in 2022.[6] A total of $128 million went to political contributions to campaigns in the 2021-2022 cycle.[7] The sheer amounts spent lend credibility to the claim that wealth rather than votes rule: plutocracy over the veneer of democracy in America. The capture of regulatory agencies by the companies or industries being regulated has existed in the academic literature since at least the 1980s. So too has the strategic use of regulation. For example, the capture of methane at farms through technology qualifies for government subsidies, but only the bigger agribusinesses can afford this technology. Additionally, JP Morgan and other large banks have been lending primarily to large agribusinesses because they are less risky than smaller farms. It is no surprise, when all is said and done, that medium and small farms have been going out of business for decades. I submit that this cannot be explained by economies of scale alone.

To be sure, a lot of agribusinesses have pledged to be more transparent on the emissions from operations, but very few of the businesses report on the bulk of their emissions.[8] Transparency only goes so far until entrenched concentrations of economic wealth (e.g., agribusinesses) find that holding the curtains open too much can hurt business. Moreover, both the political donors and their “elected representatives” both have an interest in maintaining the veneer that the public interest is being served. Adam Smith’s invisible hand only works in a competitive market, whereas neither agribusiness nor the market for political donations in Congress is a competitive market. In Wealth of Nations, Smith does not apply the competitive-market price mechanism to government. In fact, political contributions from businesses can be thought of as a special case of price-fixing.

The encroachments of plutocracy on representative democracy are largely hidden from view, and the corruption does seem to be ineluctable. Given large enough concentrations of private wealth, the buying of political power seems inevitable. Smith wrote as much concerning the use of government by managements outweighing the ability of labor unions to do just that. He predicted the strikes and the one-sided involvement of police and even military troops. The cost of plutocracy at the expense of the public good is much more since public good and the viability of our species came to depend on our baleful impact on the earth’s climate and ecosystems.  Even so, the negative impact of a political economy of business is dwarfed by the negative impact from the sheer growth of the human population on this planet since the 1800s. As intractable as the partisan, self-serving, and narrow involvement of business in government is, it would be difficult for a population that has gone from 2 billion to 7 billion in the twentieth century to begin to trim the sails by discouraging population growth. For one thing, reducing the number of potential consumers would be bad for business.

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1. Georgina Gustin, “Climate Change and Agriculture,” Yale University, February 22, 2024.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Madison McVan, “GRAPHIC: Agribusiness Spent a Record-breaking $165 million on Federal Lobbying Last Year,” Investigate Midwest, February 16, 2023.
7. “Agribusiness Top Contributors,” Open Secrets.
8. Georgina Gustin, “Climate Change and Agriculture,” Yale University, February 22, 2024.