If Trump targets drug firms, we will be at centre of trade war
DONALD Trump makes some valid points. That needs to be made clear lest readers quickly turn the page in anticipation of yet another opinion article trumpeting the author’s moral outrage over something the US president has said or done.
Having said that, many of Trump’s views and positions are threatening to the interests of Ireland and America’s other European allies. It is for this reason that there is no little trepidation across the continent about his juststarted, week-long visit to Europe.
With the US president becoming more active, more aggressive and more unpredictable towards America’s allies and their leaders by the week, the country that was once an anchor of stability in the world has become one of its greatest sources of uncertainty.
On Monday the European Union’s ambassador in Washington visited Dublin. He has met the US president on numerous occasions and is at the coalface of this continent’s dealings with the US administration. What Europe’s man in DC had to say three days ago was not very reassuring. The US president has developed an “animosity” towards the EU, said David O’Sullivan.
This is bad news for both Ireland and the rest of the continent.
On Tuesday, before boarding Air Force One for his flight across the Atlantic, the US president was firing salvoes at those who will host him for the next week, including “we lose $151bn on trade with the European Union”.
This is not one of Trump’s valid points. The figure the US president is referencing is the difference between how much Europeans buy from America compared to how much Americans buy from Europe. Currently, they buy more from us than we buy from them. But nobody is losing anything from this. On the contrary, both sides are winning. International trade is the ultimate win-win.
Despite this, Trump insists on viewing commerce as a win-lose interaction. It is for that reason that he has torn up a trade deal with Asia; demanded that the deal the US has with its two immediate neighbours – Canada and Mexico – be radically changed; and hit imports from Europe and China with new taxes which make their goods less competitive in the US market.
In response, the EU, which handles international trade for its 28 members, has hit back. It has imposed new taxes on American goods, including Harley Davidson motorbikes, a matter to which we will return presently.
If this descends into a tit-fortat cycle of retaliatory measures, the word we in Ireland should fear to hear most from Trump is “pharmaceuticals”. If he targets medicines made in Europe for punitive taxes on arrival in the US, then the Irish economy is facing a big hit.
According to American official trade figures, Ireland is the world’s biggest supplier of pharmaceuticals to the US. According to Irish figures, the sector produces more manufactured goods by value than all other sectors combined (including the agri-food sector).
If Irish pharmaceutical exports across the Atlantic are hit in an escalating trade war, the industry here would have to rethink, just as Harley Davidson has done. The iconic American motorbike maker announced that in order to avoid being hit by Europe’s retaliatory import taxes, it will shift production of bikes destined for Europe out of the US.
The reason for concern in Ireland is that the pharma companies here could do exactly the same thing – ie shift production from their Irish plants - if they are hit with new tariffs. Tens of thousands of jobs and billions of euros of exports are at stake. Irish fingers will be crossed for months to come on this.
But it is not only the economic effects of Trump’s policies that keep politicians and diplomats on this side of the Atlantic awake at night.
Along with the EU, Nato is the second great binding institution of the European order. Its purpose, once pithily put, is to “keep the Russians out, the Americans in and the Germans down”. It has been at least as important as the EU in keeping the peace in Europe over seven decades.
Yesterday Trump met other Nato leaders in Brussels. If he has shown less animosity towards the security alliance than he has towards the EU, he has been frequently critical of its European members for not pulling their weight. This is a perfectly legitimate gripe.
At great cost to American taxpayers, tens of thousands of US military personal are based in Europe to defend the continent. That has allowed European governments to spend less defending themselves. Trump, like all previous US presidents over decades, wants Europeans to cough up more to provide for their own security.
If the US president, who is not known for his patient restraint, pulls the plug on Nato, European countries who have outsourced their defence to the US will suddenly be vulnerable. Will he do that?
Observers of international relations have described Trump’s stance towards America’s allies as “transactional” – he needs to get something immediate and tangible from other countries for every action he takes. This attributes to his thinking an undeserved degree of sophistication. A much better description is “diplotainment” – the use of diplomacy to keep himself in the news and keep people talking about him.
Trump’s meeting last month with the North Korean dictator, Kim Jong-un, was perhaps the clearest example of diplotainment so far. It earned nothing that was bankable for the US side but provided the hermit kingdom’s leader with the prestige and legitimacy of being on level pegging with the most powerful man in the world. It dominated TV news bulletins for days, in both America and globally.
If attention is the man’s primary motivation, then it is perfectly possible that America’s alliances and allies could be sacrificed for his gratification. That may not happen – over the coming week or over his remaining time in the White House – but that it could is what really marks Trump out from his predecessors in recent decades.
As long as he is president, America will not be a reliable ally.
Trump insists on viewing commerce as a win-lose interaction. It is for this reason he has torn up a trade deal with Asia