2 weeks Ago
Taoiseach Micheál Martin has spoken with EU Commission chief Ursula von der Leyen. Both agreed that the EU should be measured and considered in any response to Donald Trump’s tornado of tariffs, which is expected tomorrow. All we can say is, “good luck with that”.
There is nothing remotely proportionate, or even rational, in deliberately visiting the mutually assured destruction that trade wars inflict on people and their economies. Mr Martin said he will use “every avenue” to deal with the assault, something Mr Trump is also doing. The US president has declared the war will be global, targeting all countries, on all fronts.
Stock markets across the world fell heavily on the back of the news. The initial plan was to go after countries with the biggest trade imbalances. As I have said before, tariffs are taxes – bad for businesses, worse for consumers equally in the US and the European Union Ms Von der Leyen set out her case against Washington’s assault, saying: “As I have said before, tariffs are taxes – bad for businesses, worse for consumers equally in the US and the European Union.
” Alas, she is speaking into the void, for analysts in the US have also been at pains to point out the potential harm of the tariffs. A Bloomberg analysis looked at Mr Trump’s three objectives. The first is to raise tax revenue to help close the federal budget deficit and pay for an extension of the Tax Cuts and Jobs Act of 2017.
The second is to bring back US manufacturing that has been lost overseas. The third is to achieve foreign policy goals. But each would be an enormous task in itself.
To attempt all three simultaneously was regarded as a mission impossible. Tariffs are always seen as a blunt instrument, as the damage is reciprocal. According to Yale university researchers, estimates based on what has been proposed show tariffs on imported goods would raise around $3.
52trn between next year and 2035. And this would be paid for by US importers and, ultimately, consumers and not the exporting countries. That is a lot of pain for US families to absorb.
The levies will negatively impact economic growth across the world. Here, the ESRI is predicting a fall in GNP – Mr Martin said Ireland must diversify to avoid this. “That which we can control, we need to do better at.
In Ireland specifically,” the Taoiseach said. Impervious to the grim irony of tightening the squeeze on Americans, Mr Trump has dubbed the biggest hike in tariffs since the Depression era “Liberation Day”. Even his own advisers are now pleading with him not to cause a “self-inflicted wound”.
The Washington Post says aides like Larry Kudlow and Stephen Moore are appealing for restraint. Research from a University of Michigan survey of consumers shows people are suddenly worried about rising unemployment and rising prices – a stagflation. It would be a tragedy were it to take the loss of their jobs before Americans wake up to the enormous harm being unleashed.
But like the frog oblivious to the gradual rise in the pot’s temperature, by the time it reaches boiling point, it may be too late..
