In Response to Trump, the EU Suddenly Realizes That Tariffs Are Bad
Last Thursday, US President Donald Trump, signed an executive order to impose tariffs on aluminum and steel imports — of 10 percent and 25 percent respectively — exempting Canada and Mexico. In large part, the that protectionist measure is in response against the phenomena of "dumping," in which it is believed that some regimes — specifically the Chinese — are subsidizing steel exports.
The Chinese are not the only ones known to subsidize exports, however, and we have seen the Spanish state do this as well with Spanish-grown olives.
It is interesting then, that among the countries and geopolitical blocs that have denounced that Trump’s policy is the European Union. In fact, in response to the new US tariffs, European Commission president, Jean Claude Juncker, has threatened tariffs on Harley Davidson motorbikes and jeans brands like Levi’s, both made in the US.
Nevertheless, the EU has already engaged in a trade war remarkably similar to that the Trump administration is now implementing. Following a European steel industry complaint, the European Commission found “dumping” practices in China, so the Commission raised new barriers to “corrosion-resistant steel from China” with "anti-dumping" duties of up to 28.5%.
Additionally the EU boasts of “an unprecedented number of trade defense measures in place targeting unfair imports of steel products, with a total of 43 anti-dumping and anti-subsidy measures, 20 of which are on products originating from China.” Leaving aside the fact that the Obama administration indulged in protectionist measures as well, it must be said the EU is being hypocritical again on trade issues.
The EU's Protectionism
There is no coherence on EU policies in regards to trade. If Brussels’ bureaucrats last year imposed anti-dumping measures based on import tariffs as a way to punish Chinese steel producers, it is difficult to understand why EU officials now react with so much dismay against those recent measures taken by the Trump Administration. But some of us may know EU establishment is not exactly known for its consistency. But, we do know that protectionism — understood in this case as a political reaction against foreign competition — ought to now be expected from EU officials. After all, thousands of import taxes are applied by EU officials, and existing bilateral agreements and the Agrarian Common Policy are clear evidence of the Commission's lack of support for free trade. When EU defenders talk about the“single market” they don't mean "free market."
But, even if the Chinese are subsidizing exports, this is not justification for the US to engage in a global trade war in name of “free and fair trade.” It is a shameless act of mass thievery, and the problem of government intervention of markets isn't solved with even more intervention. As Lew Rockwell has noted:
The whole point of free trade is that the private sector (producers and consumers) should have peaceful and voluntary commercial relations with the world, and the U.S. government should have nothing to say about it.
Nor should the EU government have anything to say about it either. While Trump is wrong in his tariff stance, the European Union is exposing itself as an organization guided not by open markets or free trade, but by "anti-Trumpism." If the EU were really committed to free trade, it would be calling for unilateral liberalization. But that's not something the EU has ever been about.