President Donald Trump on Sunday touted a new trade agreement with the European Union as “the biggest deal ever reached in any capacity,” but critics, however, are questioning the substance behind the headlines.
What Happened: On Tuesday, Ed Elson, co-host of the Prof G Markets podcast, questioned Trump’s claims, saying that “this was once again a framework of a deal,” which means, he says, everything that Trump has been touting over the past week “is subject to change.”
“This is a recurring theme in Trumpland,” he says, something that has consistently not worked, citing examples such as the $200 billion commitment from China, “which never actually materialized,” or the $600 billion investment from Saudi Arabia.
Regarding the Japan trade deal, he pointed to comments from Japan's chief negotiator revealing that “only 1% of it will actually be invested in America” with the remaining 99% in the form of a loan.
Referring to the $750 billion that the EU is going to spend on American energy, Elson says, “once again, not a deal. Nothing’s been signed,” before adding that Europe was already going to buy that energy due to the war in Ukraine and the resulting sanctions on Russia.
NYU Professor Scott Galloway, however, believes that this was a win for Trump, saying that “this is a good deal for the US and a bad deal for the EU.” He says, even if it’s a perceptual win, it is still a “lowercase win for the Trump administration.”
Galloway, nonetheless, believes that the EU's agreement may have been more about optics than substance, saying, “I’d like to think that Trump said, ‘Give me a win here. Give me a great press release, and I'll continue to ship arms into Ukraine.'”
Why It Matters: Early this week, Japan’s Chief Negotiator, Ryosei Akazawa, said that only 1% to 2% of the $550 billion that is set to be deployed in the United States will be actual investments, the rest, he says, will be structured as loans and guarantees.
Leading economists believe the EU deal is “bad news” for American consumers, since they will have to bear the burden of the 15% tariffs.
However, other analysts and experts have called the deal good for the U.S. stock markets, saying that it removes uncertainties, and at 15%, the tariffs are lower than what was feared earlier.
Photo Courtesy: Joey Sussman on Shutterstock.com
Read More:
