After a messy an aggressive trade dispute between the United States and the European Union, a deal was announced that Trump claimed as a big win for himself and for free trade. Many use this as vindication for the tactics utilized by Trump that many critics called antithetical to free-trade conservatism. However, how much of a win is this really for the United States?
The basic answer is, we don’t really know yet, but some very important fundaments were built. Just by agreeing to stop the tariff escalation between the two parties a large win has been given to the businesses and consumers who inhabit EU countries and the US. This is on the back of the EU’s commitment to buy more soybeans and liquidized natural gas, which is where the water gets a bit murky.
Soybeans were part of the deal, sure, and it’s an olive branch to the industry which has seen a steep decline after the primary importer of American soybeans, China, imposed strong tariffs on the product making them virtually unaffordable to Chinese consumers. This, however, may be less of a concession on behalf of the EU than it may seem. Due to China’s shift away from the American soybean market, the EU’s primary source of soybeans, Brazil, has had to try to fill that void that has caused something of a shortage in the EU. This means that by increasing US soybean imports the EU may just be seeking to compensate the shortage, a move that may have been made regardless of Trump’s new deal.
What may seem like a larger concession is the EU’s commitment to import more natural gas, of which the EU seems to be self-sufficient. While this is true, natural gas production has slowed considerably in the EU’s largest producers of natural gas, thus making the move to purchase more of it from the States less of a concession than it may have initially appeared to be.
All of this being said, this deal shows a willingness on behalf of the EU to negotiate on the existing trade situation that exists, and though the wording of the efforts to move towards a freer trade situation is vague it is not to be undervalued. Many changes and incentives are brought about simply due to the agreement on behalf of two international parties and may lead to some very positive changes down the road.