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1/ If you target me with tariffs, that's bad for your consumers who have to pay more to buy my products, and it's bad for my producers who will probably sell you fewer things. For my government, the negative impact on your consumers is irrelevant unless it changes your behaviour.

2/ If I retaliate with tariffs, that's bad for my consumers who will have to pay more for your goods and bad for your producers who will sell me fewer things. It is good for my producers who compete in my market with yours, but that is likely a different group than those hit with your tariffs.

3/ In other words, if you hurt both of us by hitting me with tariffs then my only retaliation option basically also consists of hurting us both - which only helps if it brings us to a truce or prevents you escalating further.

4/ This means that those confronted with a US willing to hurt itself with tariffs have no good options. I think you can make a credible case both for aggressive resistance and for appeasement. Anyone pretending the choice is easy is, in my view, kidding themselves.

5/ The case for aggressive resistance is that if you can cause the US real economic pain, their public may be less willing to endure it than yours - because you have the more compelling story to tell about being the aggreived party... ... and that such pain will make them back off.

6/ The counterargument is that the US may escalate considerably and that pain is... well, painful. Additionally, when faced with your resistance the US could simply offer others better deals and leave you locked out of while your competitors devour your market share.

7/ There's also the non-trade counterargument, which is that the US is important in a bunch of ways like in the context of Ukraine, or Pacific security, and alienating them too badly may endanger that engagement.

8/ The argument for appeasement is that a rate of 10-15% with a lot of carveouts is unpleasant but manegable and isn't likely to lead to a flood of recalibrated supply chains. Moreover, a deal offers predictability at a time when that's what investors and business is craving.

9/ The counterargument is that it encourages negative behaviour and hostage taking, and demonstrates your ultimate reluctance to retaliate or escalate - a lesson that may cost you in time. Now granted, should Trump reneg you could always retaliate - but the temptation will be to keep caving.

I’ve really started to view the Trump tariffs as a US consumption tax. Near as I can tell the only goal is the generation of tax revenue. As an aside there is a decent chance they are fully invalidated by the court system. So negotiating a lower level expecting them to be overturned is a fine plan.

I'm reminded of the game theory video veritasium did a while back. Lessons included something like "stand up for yourself firmly (i.e. retaliate hard), but be forgiving" Feels like the EU is either playing a foolishly short game - or depending on administration change in the US - for a long game

Don't get suckered into believing the headline figures. It's all in the detail, and Trump doesn't do details - no one man can. It takes an army to create a trade deal, not some megalomaniac who doesn't even understand how tariffs work.

I unsurprisingly agree, given that I literally wrote the book on not believing the headline figures in press releases about trade deals.

Does anyone know if this is a good or bad deal? I mean, if BMW Germany has a 15% tariff on a finished car, and BMW USA has a 50% on steel and aluminium and maybe rare earths or finished semiconductors, then who can build the cheaper car?

And its not easier when you add the "Member state factor". bsky.app/profile/sand...

Yeah, the EU being the only one of the three major global players that doesn't have an all-powerful cult of personality God Emperor makes things difficult.

How about banning Xitter for a start? Both to make a statement, and to, well, ban that Nazi bar shit from infecting Europe any further