Thread by @TheLastRefuge2

1. Why this story is silly. Again, trade is not always what it seems.

foxbusiness.com/politics/germa…

2. The U.S. cannot make a trade deal with Germany as a stand alone country. A bi-lateral trade deal is not permitted under the EU rules/regulations.

3. As laws and rules are currently written the EU is a trade bloc to any nation outside the EU. Yes, essentially Germany is the EU because Merkel rules the EU economically; and historically anything Merkel demands the EU acquiesces to.

4. Which is why many of us always say Germany *is* essentially the EU. France's Emmanuel Macron is always under Merkel's heel.

(EU Parliament pictured as agitprop)

5. Back to the auto-sector, and the trade position announced by Merkel (essentially telling the EU what she will offer, and they better get on board or she'll poke them in the eye). foxbusiness.com/politics/germa…

6. On cars, the U.S. has a 2.5% tariff on imported vehicles from the EU.
The EU has (Germans have) a 10% tariff on imported vehicles from the U.S..

7. Germany is ultra, ultra, protectionist of their auto-industry. The auto-industry is the cornerstone of the German economy. [Audi, VW, BMW, Mercedes, etc.] Any politician who loses support from the auto-industry will be kicked out of office within hours.

8. The EU would not allow U.S. car makers to sell them cars made in the U.S. They put massive trade barriers (rules, regulations and tariffs) into place to protect their auto industry.

9. That forced U.S. auto-manufacturers to move to the EU if they wanted to do business. Which they did. U.S. auto-companies build vehicles in the EU for sale in the EU. [No tariff helps that issue. It's a sunk cost now.]

10. The reverse is not reciprocal. The EU makes most vehicles in the EU and ships them into the U.S., where we only put a 2.5% tariff on their exports. However, we are their largest car market.... by a mile.

11. Over 4 million cars are exported to the U.S. each year. Without access to the U.S. car market, quite literally the entire EU economy would go into a financial recession. It's not even a question. Without the U.S., the German manufacturing economy collapses overnight.

12. So President Trump holds all the leverage. Eliminating the 10% tariff on U.S. cars does nothing, because we don't export to the EU.... we already build there *in house*. There's no benefit to the U.S. from Merkel's offer.

13. However, in the SUV market - we already apply a 25% tariff on imported trucks and SUV's (pre-Trump). That was put into place by the U.S. to protect our auto sector; and it worked. Almost all German SUV's sold in the U.S. are made in the U.S.. toledoblade.com/Automotive/201…

14. Tariffs work. That's the basic takeaway from the German SUV manufacturing example. However, more and more the EU began investing/building in Mexico and exploiting NAFTA as the entry point to the market. [A tariff workaround]

15. If we drop the import truck and SUV tariff, the incentive to build in the U.S. is gone. Germany benefits, U.S. loses. Mexico benefits, U.S. loses. There's no incentive for Trump to agree to Merkel's one-way deal.

16. Wall Street might like the Merkel deal (multinational auto corporations); but Main Street USA sees no benefit. Thankfully, President Trump is focused on Main Street and not Wall Street.

17. We are the market that every nation needs access to. Americans are the consumers that all nations, all of them, rely upon. President Trump is the first president in modern times to every use this leverage to demand balance; and protect U.S. middle class interests.

18. American blue-collar workers are getting paid more; wages are going up; more jobs and better jobs are available.... all because Trump is holding firm on U.S. trade policy and forcing investment in manufacturing to happen in the U.S.A.

19. As a direct consequence, Trump is reversing three+ decades of middle-class erosion. You know what else happens in this process? The wealth gap shrinks. Blue collar workers rise in overall income and wealth.

20. Our job is to support these MAGAnomic policy initiatives. And because people can actually see the changes and benefits around them, these simple policies are highlighting how much we were ripped-off by Washington DC and consecutive prior administrations.

21. The Multinationals on Wall Street will go bananas if Trump imposes the 20% import duty on cars. They will call it the end of the world. Relax, it won't be.... what will happen, *if* he follows through, will be an explosion of auto factories inside the U.S.

22. I doubt Trump will pull the trigger on the 20% car tariff, because he won't need to... these countries have no option except to take the knee, one-by-one, against just the possibility of it.

23. The ultimate prize for U.S. workers is for President Trump to pull out of NAFTA. That's the big one.... Get out of NAFTA and grocery prices will drop; domestic investment will explode; and the trade loophole exploited by Asia/EU will close.