Jorge Costa Oliveira
International trade law is governed by global multilateral agreements under the WTO and a multitude of regional multilateral agreements (EU, USMCA, Mercosur, AFTA, CPTPP, CIS, AfCFTA, TiSA) and bilateral free trade deals.
Beyond the instability and uncertainty triggered by the media frenzy surrounding the constant advances, setbacks, and suspensions of tariffs and announced pre-agreements, the posture of the US government reflects the rule of the strongest – a clear violation of the rules the US is bound by in matters of international trade. These include blatant breaches of treaties and of commitments negotiated over decades, and of the fundamental principle of the most-favored-nation clause.
Trump’s “tariff fever” seeks to rebalance the US trade deficit by encouraging reindustrialization through reshoring – and, in turn, increasing government revenue. With some luck – and a lot of wishful thinking – this might end decades of budget deficits and allow for a reduction of the federal public debt.
Beyond these classic motives, there are other driving forces: (i) to make countries pay tribute for the global Pax Americana and the dollar’s role as the leading currency in the international payment system; (ii) to punish countries (e.g., Brazil) for sovereign domestic decisions that displease the American capo; (iii) to penalize countries that are allies of China (e.g., Laos and Cambodia) or that the US suspects of being transshipment bases for Chinese goods (e.g., Vietnam).
Despite threats of high tariffs, the US government frequently backtracks – the famous T.A.C.O. effect – when it meets resistance (such as from China) or when financial markets tumble out of fear of inevitable inflation via imports and/or due to the uncertainty and instability caused.
In the case of the recent US–EU trade pre-deal, several points stand out. One is the confirmation of Europe’s regrettable state of dependence on a predatory America. However, while Europe does rely heavily on the US for its military defense, this is not the case in trade – making the humiliating acceptance of grossly unequal terms unacceptable.
Another is the mediatic nature of the figures announced – particularly as regards energy purchases, with “delusional” numbers (as Reuters put it, regarding the $750 billion LNG purchase commitment over three years) that are impossible to fulfill – not to mention that gas and oil are purchased by companies, not by states or by the EU.
But the most disheartening moment was seeing Europe’s top representative – from a political and economic bloc governed by the rule of law, including international law – endorse Trump’s posture of dismantling internationally recognized rules and principles and give cover to a return to the law of the jungle.
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