Trump Is Putting The ‘Free’ Back in Free Trade

AT: Pres. Donald J. Trump announced a breakthrough deal with the European Union regarding U.S. trade relations with the E.U. member-countries.  He stated, “We had a big day, very big,” standing in the White House Rose Garden alongside Jean-Claude Juncker, the European Commission president.  Although our president’s fondness for the word “big” may bring a smile to our faces, we may happily mock ourselves with the thought that this event is not only “big,” but “hugely” important for our economy.

The goals of any “deal” are crucial in understanding the direction of thinking of the parties.  Here, new goals were announced – namely, they struck a deal to work toward zero tariffs,  barriers, and subsidies.  In short, they agreed to work toward a real free trade arrangement between the U.S. and E.U. markets.  “Real free trade” may be distinguished from the bogus free trade we now have where complex econometric models are in place to make rules that are “fair” based on modeling of David Ricardo’s comparative advantage theories, taking into account price and cost factors in the E.U., the USA, and the world’s economies.  President Trump has honestly and fairly stated in public meetings that the present formulation and goals of trade between the E.U. and the USA diminish the USA economically.

Although duties now charged are not intended to be protective tariffs as in the past, but instead are conceived as “fair tariffs” that allow both markets to exchange goods in a way that is most profitable and cost-effective, in fact, they produce imbalances that cause our economy to suffer.  The complex rules governing both sides are to prevent trade wars, retaliation, and negative activities like flooding markets to gain a temporary advantage, and then, when the competition is flooded out, jack up the prices and screw the consumers in that market.  But these rules, according to Trump, are spun in a way such that U.S. industry suffers.  more here