Trump threatens 50% tariff on European Union, which will cause economic harm

Trump threatens 50% tariff on European Union, which will cause economic harm
Ursula von der Leyen, head of the European Commission

“President Donald Trump on Friday threatened a 50% tariff on goods from the European Union, citing a lack of progress in current trade negotiations….’Our discussions with them are going nowhere!’ Trump wrote. ‘Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.’”

Tariffs can backfire by increasing the expenses of American manufacturers, and thus reducing their output. Tariffs increase the cost of the raw materials and inputs American manufacturers use to make things, since many of those inputs and materials are imported. Past tariffs on steel and aluminum “resulted in 75,000 fewer manufacturing jobs” in American “firms where steel or aluminum are an input into production,” while saving only 1,000 jobs in the U.S. steel industry.

A straight 50% tariff on all products from the European Union is a particularly bad idea. Economist Scott Lincicome says that such “US tariffs actually undermine US manufacturing & exports” because “US exports in 2020 contained $46.1 billion worth of imported intermediate inputs from Europe – the most of any US trading partner.”

The U.S. Bureau of Economic Analysis says that “10.2 percent ($186.1 billion) of the value of U.S. gross exports in 2020 reflected imported content tied to domestic use of imported intermediate inputs. Of that total, $29.8 billion was imported from Canada, $14.7 billion from China, $46.1 billion from Europe, $23.1 billion from Mexico, and $72.4 billion from the rest of the world.”

The U.S. and European stock markets fell after Trump’s threat to impose tariffs. The three major European stock market indexes fell sharply: The benchmark STOXX 600 index fell 1.7%. Germany’s DAX fell 2.4% and France’s CAC index went down 2.2%. London’s FTSE index fell 1%. US stocks also fell, with the Dow opening lower by 480 points, or 1.15%.

European Commission President Ursula von der Leyen said last month that the European Union made a “zero-for-zero” tariff offer to get rid of its tariffs on American products if the U.S. will get rid of its tariffs. But Trump was not satisfied with that offer, citing the fact that last year, the U.S. had a trade deficit of over $200 billion with the European Union. Trump has complained about the EU having value-added taxes (VATs) and digital service taxes (DSTs), but these taxes are clearly not the primary reason the U.S. has a trade deficit with Europe — the United Kingdom also has a VAT and a DST, yet the U.S. runs a trade surplus with the United Kingdom. Even in a world with no trade barriers, the U.S. would run a trade surplus with some countries, and a trade deficit with many others.

The economic historian Phil Magness, who helped get rid of Harvard’s left-wing president by exposing her plagiarism, says that Trump’s tariffs will harm the Republican Party: “Tariffs are a recipe for electoral disaster. For the past 200 years, voters have consistently punished incumbents who raised tariff rates. 2026 will be no different if we continue on this course.”

In a Wall Street Journal op-ed, former Senator Phil Gramm (R-TX) and economist Don Boudreaux point out that over and over again in American history, voters punished politicians who imposed high tariffs by voting them out of office:

Americans have historically hated high tariffs and never suffered them for long. Almost 300 years ago American colonists revolted against repeated British efforts to impose tariffs on American imports…The “Tariff of Abominations” in 1828 imposed an all-time high average tariff rate of 57.3%. In the following elections tariff supporters suffered devastating electoral defeats…From 1830-60 average tariff rates fell by 70%, and industrial production soared at an average annual rate of 6.2%. By 1860 average U.S. tariffs were among the lowest in the world. In 1842 Congress adopted and Whig President John Tyler signed the so-called “Black Tariff,” the only significant effort to raise tariffs from 1830-60. But less than three months after the enactment of this tariff, the Whigs lost their majority in the House and three seats in the Senate. In the 1844 elections they lost the Senate majority and the presidency. The tariff was repealed…The McKinley Tariff, enacted in October 1890, triggered a political bloodbath a month later when William McKinley and 92 other Republican representatives lost their seats and four Republican senators suffered the same fate…In 1909 Republicans again raised tariffs with the passage of the Payne-Aldrich Tariff, and voters again revolted, taking the White House, 117 House seats and 13 Senate seats away from the Republicans in the 1910 and 1912 elections. The tariff was repealed…The infamous Smoot-Hawley Tariff, enacted in 1930, helped transform a financial panic into a worldwide depression. The 1932 elections were cataclysmic for the Republicans, giving Democrats control of the White House for 20 years, the Senate for 44 of the next 48 years, and the House for 58 of the next 62 years.

When the 50% tariff on Europe goes into effect, Europe will likely retaliate by increasing its tariffs on our products, wiping out jobs in our export sector, as has happened in the past.

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for CNSNews.com and has appeared on C-SPAN’s “Washington Journal.” Contact him at hfb138@yahoo.com

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