Trump uses US trade leverage to help working Americans
Recent tariffs on goods from Mexico, Canada and Colombia are not trade wars. They are a response to political issues — illegal immigration, Fentanyl, cartels and crime. The Trump administration is showing it will use trade as leverage to advance domestic policy goals.
So far, it is working: Colombia and Mexico yielded to President Trump’s demands after the president threatened them with tariffs. The tension between the European Union and the U.S., however, is about trade — and a lot of it.
As Daniel Hamilton from Brookings writes, U.S.-EU trade in goods and services is nearly twice that of U.S.-China. On top of that, revenues from U.S.-EU foreign affiliates — American and European-controlled companies operating abroad — are three times that of U.S.-Canada-Mexico foreign affiliate sales and many multiples greater than U.S.-China investment, which is subject to significant restrictions from Washington and Beijing.
The current trade relationship with Europe is badly broken and ordinary Americans are paying the price. More than a decade ago, the Obama administration trade representative declared that the EU’s trade policies harm “U.S. farmers, ranchers, manufacturers, workers, and their families.” It’s only gotten worse. The EU’s increasingly hostile environmental, social and governance or ESG agenda has added U.S. oil and gas workers to the list of middle-income wage-earners bearing the brunt of the EU’s policies.
European tariffs on U.S.-made cars are four times what the U.S. places on European auto exports. The EU charges higher levies on food, beverages and other agricultural products. And On top of that, the European Union countries impose a 21.6 percent value added tax on goods and services, meaning that American products sold in Europe are frequently taxed at 30 percent or more.
President Trump has called the EU’s trade policies an “atrocity.” This week, he announced that the U.S. would pursue "recipropcal" trade. It’s a common-sense policy: American-made products sold in Europe should be taxed the same as European-made products sold here.
But the Trump administration needs to do more on EU trade. It’s a travesty that Europe still imports record amounts of natural gas from Russia. Trump’s order lifting the Biden administration’s Putin-enabling ban on new liquefied natural gas export permits is a move in the right direction. Trump’s energy advisors should be calling on their European counterparts to attend a multilateral energy summit in Houston that includes a tour of LNG terminals.
Strong transatlantic energy diplomacy is also good domestic policy. A December 2024 S&P Global study co-authored by Pulitzer-Prize winning energy analyst Daniel Yergin projects that increased LNG exports would support nearly 500,000 high-quality domestic jobs — many in blue-collar sectors such as construction and manufacturing that have been on the losing end of what Chapman University’s Joel Kotkin has dubbed as ESG’s “war on the working class”
Since 2000, real disposable income per capita has increased twice as much in the U.S. as in Europe. Fortunately, Europe looks like it’s sobering up from the regulatory bender that’s behind the continent’s productivity crisis. The EU has unveiled a new policy roadmap titled the “Competitiveness Compass” to provide air-cover for a rollback of some of the bloc’s most aggressive measures. This includes the EU’s climate disclosure rules, part of the European Green Deal, which require U.S. companies doing business in the EU to audit their supply chain to align with global climate targets.
Trump should affirm Brussels’ openness to change and call for broad deregulation across the European market, even as his administration freezes green energy subsidies at home. The Biden’s administration’s corporate welfare giveaways for renewable businesses were painful for lower-income Americans, who were left with skyrocketing electricity bills and a flat-lined jobs market.
Given Europe’s reliance on U.S. exports, Trump is smart to use trade as leverage. But the end policy goal should not be protectionism. Trade reciprocity, energy realism and regulatory relief on both sides of the Atlantic will do more to help working Americans.
Michael Toth is a resident fellow at the Foundation on Equal Opportunity and a founding partner of PNT Law based in Austin, Texas.
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