Commentary
An eye for an eye, a tariff for a tariff
If the U.S. president is now playing at cajoling each EU country individually, it’s possible that some galaxy-brained figure will take the bait and blow up the single market. As it happens, the prime suspects for that are none other than Meloni and her government.
Many were under the illusion that trade would be free forever, “free to the nethermost recesses of hell,” to quote Schumpeter. Now that we have indeed been plunged into hell, they are surprised that free trade is also being consumed by the flames.
But the problem was already there, obvious even to the uninformed. Unregulated globalism was creating a growing imbalance in trade relations, with some countries importing too much and countries exporting too much. And this led to the consequent buildup of financial imbalances, with exporters holding more and more credit and importers being buried under a mountain of debt. Buried deepest of all is the United States, with a net debt towards the rest of the world that now exceeds $23 trillion.
Ever since the 2008 crisis, U.S. administrations have figured out that America's love of imports has put its debt on a dangerous trajectory.
Since then, Washington's civil servants have relentlessly increased trade and financial barriers, both in the form of tariffs and in other forms. And the world, as is often the case, followed suit.
The consequence is that, while in 2010 there were a total of 56 trade-discriminatory measures in effect worldwide, by 2023 the number reached 376, a more than sixfold increase.
In short, the protectionist era has been here for a while. Trump is only taking trade restriction to its extreme consequence: war (whether trade war or the other kind).
At the moment, the new Trumpian America is trying to set off this conflict against the entire globe. Until Monday, the U.S. applied the doctrine of “friend shoring”: doing business with Canadian and European “friends” and keeping non-aligned Russian, Chinese and Arab “enemies” at bay. Now, however, the U.S. protectionist threat is turning against everyone, seemingly indiscriminately. Thus, Xi Jinping's warning seems to be coming true: “Pursuing protectionism is like locking oneself in a dark room. Wind and rain may be kept outside, but so is light and air.” The result is that everyone is firing blind, no longer making any distinction even for old allies.
So great is the universal confusion that all the plans elaborated by the European summits might become nothing more than waste paper. Not least the Draghi report, which had made the political-economic alliance with the United States into its lodestar. America first forced us to buy its energy at a high price, and now it wants to put a surtax on our goods. This might be a bridge too far for even the most subordinate of lapdogs.
But it is not only the Atlanticist orientation that is in danger of being disrupted. On closer examination, the heart monitor of the European Union is going back into fibrillation these days. Among the few remaining glues of EU policy is the regime of trade with non-EU countries, which is still essentially the same for all members of the Union. However, if the U.S. president is now playing at cajoling each EU country individually, it’s possible that some galaxy-brained figure will take the bait and blow up the single market. As it happens, the prime suspects for that are none other than Meloni and her government.
The EU was the only power in a position to get both the great American debtor and the great Chinese creditor at the same table to start an international economic negotiation, the foundation of all concrete peace processes. It couldn’t do it back when it seemed united; it is unlikely to try to do it today.
By now, there are those who only hope that Europe will redeem itself with some application of the law of retaliation: an eye for an eye, a tooth for a tooth, a tariff for a tariff. In the fiery pit of the crisis of the old neoliberal order, that is the most obvious move. And it is also the path to plunging world capitalism into an even hotter circle of hell.
Originally published at https://ilmanifesto.it/i-sudditi-e-la-legge-del-taglione on 2025-02-04