Trump announces EU trade deal with 15% tariffs | Hacker News Reader

Trump announces EU trade deal with 15% tariffs

cnbc.com

27 pointsbreadwinner25 comments

The big problem is that it's 15% US tariffs and no reciprocal EU tariffs.

The problem created is this: EU firms get shut out of the US, but the US firms that compete with them are not shut out of the EU. Thus the US firms can operate at greater scale and outcompete the EU firms, leading to one-sided job losses having nothing to do with merit.

So I can have a great, well-run EU firm and do everything right, and then I can lose it all for no reason, due to this insane political decision.

If this is the protection the EU offers, then why should I invest my money here? Why should I even live here? Because from this I can only read it as that the commission believes that Americans should have more rights than I do and that I shouldn't be allowed to have a business.

And then you have the EU invest $600 billion in the United States instead of the European Union. I hope EU hasn't also accepted lowering food quality down to US standards...

My take is that it’s all an illusion. The deal looks good on paper for the US. But EU/Japan/etc. big business will setup subsidiaries in tax haven states such as Texas or Florida and sell back to themselves. Similarly to how US firms used Ireland.

That isn't really possible.

If goods are brought into the US, with tolls paid, and then sold for much more than the assessed value, the goods will probably be seized.

This agreement is certainly exactly as bad as it looks. No one has historically entered into an agreement like this. Not Sweden when it was a tiny country not part of the EU, no country whatsoever.

When a country has been had its goods tariffed the response has always been to counter those tariffs with tariffs on goods with an equal value, so this agreement is completely exceptional.

You’re making it out like it was zero sum prior which it wasn’t and never has. The increased is 5% and the new baseline for taxable goods ie. 15% from the prior 10%. It’s basically the EU equivalent of VAT but without telling the naive American it’s an increased tax on the consumer.

The real news is these investments/purchases and that’s what my comment was about. No other country is investing in the US outside of mining. But to make face you’ll agree and setup a paper mill for manufacturing, as for power/natural resources, buy back through your own entities. Look up the news about foreign mining, they’re up in arms, but that’s exactly what they voted for.

EU firms too pay VAT, so no, it isn't somehow equivalent to VAT.

These investments and purchases look bad, and are bad, but the really bad things is the non-reciprocal tariff, which makes it impossible to invest in EU production that can scale.

The EU has no say about how its members invest and doesn’t have the power to invest this sum itself so I’m very curious about what this supposed $600 billion investment is supposed to be.

Sad day anyway. France was apparently amongst the sole country which wanted to use the tools specifically put in place to retaliate against tariffs but as usual the German got their way and we end up with a deal which serve only them.

The Union is as good as dead as far as I’m concerned and the terrible thing is that it was probably Trump true goal.

> France was apparently amongst the sole country which wanted to use the tools specifically put in place to retaliate against tariffs but as usual the German got their way and we end up with a deal which serve only them.

What was the retaliation France wanted?

France wanted to activate the Anti-Coercion Instrument immediatly after the 30% tariffs were announced. The law was passed after the first Trump presidency supposedly to prevent Europe being pressured into the kind of situation Von Der Leyen voluntarily put us in. It's a set of retaliatory measures which can be taken very quickly: blocking the ability of a country's companies to bid for some European contracts, suspending technological transfer, relaxing IP law.

Anyway, as long as the PPE will be in charge and the comission is staffed with German rejects, the Union will go nowhere. European only have what they deserved. I'm just sad my country is dragged down with the sinking ship.

So the Germans finally did manage to destroy Europe after all.

That it hasn't, but small thanks.

This is incorrect. US firms also have to pay tariffs in the US, unless the products are manufactured in the US, which almost none of them do. And that's unlikely to change any time soon because it is cheaper to pay 15% tariff that it is to manufacture in the US.

Yes, I should say firms doing manufacturing in the EU.

But the result is the same. It becomes impossible to invest in the EU.

If they refuse to take measures against unfair competition (tariff for the firm manufacturing in the EU, but no tariff for the firm manufacturing in the US), then they're throwing you under the bus and it's not an acceptable use of resources to manufacture there.

You can't trust someone who isn't willing to protect your investment.

> It becomes impossible to invest in the EU.

Really? If you invest in the EU, you can import the raw materials at whatever they cost, and sell your goods to the world. If you invest in the US, you import your goods at cost + 15%, and can only sell to the US because elsewhere your goods cost 15% more than those coming from the rest of the world.

If it was a VAT, that doesn't happen because everyone gets to claim the VAT back on the cost of goods, and exports don't have VAT levied. But this is a tariff.

> elsewhere your goods cost 15% more than those coming from the rest of the world.

That's impossible. Goods manufactured in the US will cost way more than that. The minimum wage in Vietnam is under $1 USD per hour, while in the US it ranges from $7.50 to $15 USD. So unless the product is manufactured by robots (which defeats the point of tariffs), products manufactured in the US will be around 10x more expensive than those manufactured in Asia.

The US can remove tariffs on raw materials imports in five minutes with an executive order.

We can't assume that the US will hamper its industry for no reason, or that its raw materials industries will forever be inefficient.

The $0.75T energy purchase is also huge.

Russia shot itself in the face creating a failed state at its border and destroying trade relations.

Basically, the plan was generally 10-15% baseline tariff across the board for all countries, and higher rates for sectors such as steel and aluminum.

This will lead to inflation. Once prices increase, the prices won't come down, so the inflation will be permanent.

US manufacturers will get used to decreased competition, which will lead to poor quality and decreased innovation.

Smuggling will increase, particularly from Canada. Instead of going to the Apple store to buy your next phone you will agree to meet a stranger in a dark alley and pay cash to buy a smuggled iPhone.

The tariffs will be felt by poorer Americans while the rich will barely notice.

Probsbly better to once a year go to Latin America or Asia for holiday and do all shopping there and any clinic appointments

If the government taxes goods by an additional 1%, is that 1% inflation?

No. Tax is on the cost. If the good sells for $100 and cost $10. Then 10% additional tax increase the cost to $11. If the vendor decides to keep the same profit, then the price goes up by $1, which is 1%

If the price goes up then yes.

I could be wrong but once tariffs are set to higher rates, it's extremely difficult to lower them by subsequent leaders

People will definitely cheer when you lower prices. Businesses will push back, but that's also difficult since "we want to keep prices high" isn't a good lock. They have other ways to apply pressure, but it's (roughly speaking) a level playing field.

It's only possible to have tariffs now because people don't grasp the consequences. When prices go up, the tariffs will be less popular.

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