PM concedes Trump’s tariff tirades could raise prices
Portugal is doing what it does best as US president Donald Trump ‘threatens the world’ with tariffs and the pulling of overseas aid. While multiple countries and world leaders ‘react in outrage’, Portugal is reacting with ‘serenity’ (one of this nation’s greatest fallback words, along with ‘tranquility’).
Portugal will not be spooked into saying anything untoward, nor will it be goaded into making counter-threats.
Not so a number of other European leaders, who are clearly smarting over the president’s comments that Europe is an “atrocity”.
Reading between the lines, however, one can see that Mr Trump’s ‘outrageous comments’ and cowboy-like behaviour are already reaping rewards: his threats of 25% tariffs on Canada and Mexico have seen both countries fall over themselves to try and address some of the president’s concerns (agreeing to tighten border measures against the flow of migrants and the drug fentanyl) and tariffs have thus been ‘suspended for a month’.
China has not been so obliging – but that appears to be more because Mr Trump hasn’t spoken to Xi Jinping yet. As the Resident went to press, the White House reported that he was due to.
As for the EU – well, the informal summit earlier this week saw the likes of France’s president Macron bristling with indignation and leading figures all promising a “firm response”. But Portugal’s representative was surprisingly calm.
“We have to look at these issues realistically,” prime minister Luís Montenegro told reporters. “In recent years, Europe has been over-regulated and has perhaps had over-ambitious objectives in terms of having rules similar to those of other trading blocs.”
“You don’t have to be a Nobel Prize winner in economics to realise that the increase in tariffs on products that contribute to price formation on the side of American industries will have an impact on price increases,” he conceded, but Mr Trump “was elected based on the popular vote of the Americans and, therefore, we must respect his positions”.
The PM’s serenity stood out among the otherwise ‘fevered reporting from Brussels’. It also served to highlight the political differences within the bloc. Indeed, press reports from the Brussels summit did not mention the reactions of right-wing leaders, like Meloni (Italy) or Orbán (Hungary): the impression that the EU was ‘smarting’ was notably one-sided.
And this is where Portugal has always had its place (serene, somewhere in the middle of everything, but not making any waves).
“This is an evolutionary process, and my conviction is that political dialogue must be the key if we are to have the economic conditions to have good growth rates, both in the United States and in Europe,” the PM told upturned microphones.
In Portugal, the message from Minister for the Economy Pedro Reis was very similar: “This is a game between large economic blocs” – and, as such, Portugal doesn’t want to anticipate the moves, or the results.
Lisbon stocks started the week trading lower as investors were described as bracing “for the US tariffs’ outcome” – but, by Tuesday, they were already recovering: perhaps a sign that people are reading into Trump’s narrative, and understanding much more that it is a form of challenge, not something set in stone. It is a “this is what we want; if you don’t give us a lot of it, we will hit you with tariffs”.
So, what does Mr Trump want from the EU?
First, the ‘terrible threat’: yes, it is real. Donald Trump was apparently aghast when visiting a European city recently to see no Chevys or Dodges pulling up at traffic lights: “They don’t take our cars, they don’t take our farm products, they take almost nothing, and we take everything from them. Millions of cars, tremendous amounts of food and farm products” – and then the ultimate insult, that Europe is “an atrocity” and has treated America “terribly”.
Donald Trump has not come up (not at the point of writing this text, anyway) with a timeline for imposing tariffs on the EU, but “it’s going to be pretty soon”, he told journalists this week – which suggests that once he has finished getting his way with Canada, Mexico, South Africa (yes, he is not happy with that country’s gratuitous land-grabbing either) and possibly China, he will be setting his sights on ‘the bloc’.
What will Mr Trump want from Europe in order NOT to slap tariffs on its products? Almost certainly he will want it to import more LPG (liquid petroleum gas); he may want it to import chlorinated chicken (sacré bleu!) and to reduce cooperation with China; possibly even to import American cars …
The reality is that no-one is venturing what Mr Trump wants because the ‘terrible truth’ is that he appears too capricious and unpredictable to even try to predict. But he is, first and foremost, a businessman – and in that he is exceptionally predictable – so it should not take too much intelligence to work out what kind of cooperation will be suggested.
It is the kind of question very possibly answerable by ChatGPT. Maybe European leaders are already at their keyboards? Once they feel they have the answers, it would simply be a question of negotiating and ‘sealing a deal’.
Portugal, per se, will have very little to do with this process, as the country is not considered any kind of big cheese within the EU bloc, but its natural serenity may keep this country, at least, from the panicky headlines of so many others.
Tariffs of the past
During his first term, Mr Trump imposed tariffs on steel and aluminium from the EU, which retaliated with trade levies on a number of items including Harley Davidson motorbikes, bourbon, denim and orange juice. None of these would affect Portuguese consumers drastically (if at all).
But the US market represents almost 7% of Portuguese exports (mainly comprising food and drink), so it is extremely important – and Portugal will just be quietly hoping that the EU holds its nerve when Mr Trump focuses on what he wants from Europe, and that the whole tariff question takes on far less frightening proportions.
By NATASHA DONN
