Expert Economist Michael Huethter: How Europe Can Counter Trump's Tariffs by "Hitting Trump's Tech Tycoons"
Europe Aims to Engage with Trump's Oligarch Circle
💬 Facebook 💬 Twitter 💬 Whatsapp 💬 E-Mail 💬 Print 💬 Copy Link
Trump's not only imposing tariffs on the globe; he's disrupting the foundation of America's economic charm, claims top economist Michael Huethter. The global economic order is being tipped over. The EU's chief of the Institute of German Economy advises a dual game plan to tackle Trump.
Q: Mr. Huethter, the stock market slide continues - triggered by Donald Trump's tariffs towards the world. Is this financially justified or merely panic?
A: It's complicated. Trump's tariff hikes come with anxieties that fuel panic. The market drop is mostly justified because Trump isn't merely imposing tariffs; he's creating domestic chaos. Everything that lured foreign investors - scientific freedom, democracy, robust capital markets - is disappearing. Trump is steering the U.S. into economic ruin.
Q: Politics - Can Donald Trump have his own Liz Truss moment? Can the markets stop Donald Trump?
A: I believe Donald Trump will eventually face resistance. If Wall Street reacts this intensely, it won't be ignored. He'll try to shift the blame, as autocrats often do, but it won't work. Yet, we shouldn't be overly optimistic: Trump will take a long breath before initiating talks and presenting mini-deals as personal victories.
Q: Many countries have already declared they want to negotiate with the U.S. now. Trump sees this as confirmation that his policy is working. Should these countries have reacted differently?
A: The U.S. brandished a gun at these countries. They picked their battles given they, unlike other world regions, had no alternatives. This is about the size of the U.S., not Trump's strength.
Q: Is Trump overestimating America's strength in the end?
A: Very likely. Trump can be easily swayed by people lauding him and offering small deals. For him, it can quickly seem like a good deal. The EU won't make a deal at our cost. What Jean-Claude Juncker agreed with him was mere chit-chat. It didn't amount to much and didn't last. So, the EU needs to deliberate carefully on what it should do now.
Strategies:
Possible Moves
- Targeted Tariffs: Europe can impose specific tariffs on various goods and services, causing disruption to Trump loyalists in the tech sector.
But do tariff cuts make any sense?
A: Although it might seem counterintuitive, targeted tariff reductions can tactically help us gain an advantage. For example, in the case of cars - even with zero percent tariffs, American trucks would hardly sell more. However, you are correct: Trump's focus on the trade deficit, which disregards the current account balance with digital services, shows his limited understanding of economics.
Digital Measures:
Technological Tactics
- Regulatory Frameworks: Europe can leverage the Digital Services Act (DSA) and the Digital Markets Act (DMA) to exert control over online platforms and digital "gatekeepers." These acts permit the EU to impose fines and penalties on non-compliant companies, potentially impacting those associated with Trump's network.
- Data Protection: Europe's General Data Protection Regulation (GDPR) offers a legal base to regulate data processing and transfers. This can be used to limit the operations of U.S. companies that may be part of Trump's oligarch network, particularly if they fail to comply with GDPR standards.
- Cybersecurity Standards: Europe can apply the Network and Information Security Directive (NIS2) to enforce strict cybersecurity measures across critical sectors. This can impact companies that are part of the Trump network by ensuring they meet rigorous EU standards.
The EU's Offer:
The EU could propose a comprehensive free trade agreement for industrial goods. However, whether this would convince Trump, given his focus on the trade balance, remains dubious. Therefore, a dual strategy of targeted tariffs and regulatory measures is recommended.
In Summary:
In essence, Europe can use targeted tariffs and digital regulatory tools to disrupt Trump's oligarch network. This involves identifying key digital players, imposing targeted sanctions, and boosting the EU's own tech sector to reduce U.S. influence. Collaboration among European countries and leveraging bargaining power in trade negotiations are crucial components of this strategy.
[1] European Commission: Proposed Digital Services Act (DSA) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12524-Digital-Services-Act-DSA[2] European Commission: Proposed Digital Markets Act (DMA) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12522-Digital-Markets-Act-DMA[3] European Commission: Network and Information Security Directive (NIS2) https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/11741-Proposed-Network-and-Information-Security-Directive-NIS2[4] European Commission: General Data Protection Regulation (GDPR) https://ec.europa.eu/info/law/law-topic/data-protection/reform/what-general-data-protection-regulation-gdpr_en[5] European Parliament: Hearing on Tackling Illicit Influence in Digital Elections (2021) https://www.europarl.europa.eu/two-tens/en/answers/document/A-10-2021-003869
- European policymakers could consider lowering tariffs on certain vocational training programs to strengthen the EU's workforce, countering potential deindustrialization resulting from Trump's tariffs.
- Despite the standard economic approach, the application of targeted tariffs on specific goods and services associated with Trump's tech tycoons, as proposed in the Digital Services Act (DSA) and the Digital Markets Act (DMA), could serve as a strategic countermeasure to exert control over online platforms and digital gatekeepers.
- In light of the EU's General Data Protection Regulation (GDPR) and the Network and Information Security Directive (NIS2), European governments could impose strict cybersecurity regulations on tech companies, potentially affecting those linked to Trump's oligarch network, thereby limiting their influence within the region.
