Donald Trump’s announcement of tariffs on EU products was met with outrage from Ursula von der Leyen and European elites and appears to have sparked a veritable trade war, with both sides brandishing the threat of further tariffs. But in a long, detailed – and quite funny – article for the German collective blog Achse des Guten (Axis of Good), the consultant and commentator Michael Alberts argues that the only reason there has not been a trade war much earlier is because the US was not fighting back. Donald Trump is right. The EU started the war by imposing tariffs and all sorts of other encumbrances on US (and other foreign) products.
Using a traditional German saying, Alberts wryly observes that when the Europeans point the finger at Trump, “three fingers of their hand are pointing back at them”. He notes that the EU’s notoriously complex web of regulations already represents a massive trade barrier for non-EU manufacturers, who often would need to alter their products even just to enter the EU market. But EU protectionism is also more explicit. Alberts explains:
The EU itself levies considerable import duties on imports from outside the EU. The amount depends on the specific product: a science in itself. Instead of a clear table, the EU offers importers internet-based query forms, so that there is little public transparency. In general, the tariffs appear to reach up to 25% of the import value; for typical consumer goods they appear to be 12 or 14% (textiles or computer monitors)… On the other hand, import duties on EU products to America have so far only been a maximum of 5%. Starting on April 2nd, the US Government will introduce a system of “reciprocal tariffs”, i.e., the same tariff level in both directions. If the EU imposes a 10% tariff, the same will apply in the other direction with immediate effect. What is unfair about that?
Moreover, Alberts argues that even Trump’s criticism of the discriminatory impact of European value-added tax is not so off-the-wall or “stupid” as it has been made out to be. He continues:
The new US Government is also denouncing the EU’s import VAT. The intricacies of tax law are confusing, but considered in the abstract, Donald Trump’s complaints are not far-fetched: the result of the VAT is to directly place a burden on the consumption of end users; in Germany, it is quite high at 19% normally. In the USA, there is no such tax at the national level, but in the individual states and municipalities; its overall level is somewhere between 5-10%, so typically 10 or more percentage points lower than here [in Germany].
America thus relies more heavily on income and corporate taxes (hence on production) as sources of public financing, while Germany draws more heavily on consumption. Why does this give rise to a distortion of competition? To use an ideal-typical exaggeration, if there were only income taxes in one country and only taxes on consumption in another, exporters from the first to the second country would be double-taxed, while in the other direction, they would not be taxed at all! The imbalance is obviously discriminatory.
If Donald Trump is not the one who originally disturbed the peace, but only wants to reduce obvious injustices in foreign trade in the interest of his compatriots, why the loud and hypocritical clamour, especially in Europe? Because some have become so accustomed to the way things have been for decades that they regard the cozy status quo as “normal”, and any change that is to their disadvantage is perceived as an aggravating disturbance.
Michael Alberts’s full article is available in German on the Achse des Guten website here. Translation by Robert Kogon and DeepL.
Robert Kogon is the pen name of a widely-published journalist covering European affairs. Subscribe to his Substack.
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