trade policy

By a narrow vote, the European Parliament has effectively blocked the entry into force of the partnership agreement with Mercosur. This is yet another failure by the EU to improve its prospects for prosperity and economic transformation. The agreement that was signed is a step in the right direction, but delaying it means accumulating lost benefits—at a time when growth in the core of the euro area is dangerously close to zero.

‘Liberation Day’ marked a real threat to the world, as it risked sparking a global trade war. On 2 April, Donald Trump announced the largest tariff hike since the Smoot–Hawley Tariff Act, 1930. This move reflected Trump’s views on international trade and the global economy: He sees trade as a zero-sum game that the US is losing, and, to him, tariffs are a way to help the American economy and public finances.