MAGA is going gaga over tax hikes.
The amount of bragging over tax hikes on X is quite stunning. And it continued yesterday on news of a deal with the EU that was no deal at all.
Trump likes to say “We will charge them tariffs” but them is us. The lead chart shows collected import duties, paid by US importers, not them.
The importers have a choice. They can eat the tariffs or pass them on with price hikes paid by consumers.
From January through April, importers tried to hold the line on price hikes. That is ending now.
The sad thing is these tariffs disproportionately impact small businesses and lower-quintile consumers the most.
Trump’s $750 Billion EU Energy Deal
MAGA also braggs about an energy deal with the EU that is nothing but lies by both sides.
Please consider Trump’s $750 Billion EU Energy Deal Collides With Market Reality
The European Union has promised President Trump a $750 billion shopping spree on American energy. Making good on that pledge will be a tall order.
“It’s a nice number but it’s just not realistic,” said Warren Patterson, head of commodities strategy at ING Bank. “You’d essentially have to divert all energy trade. That’s just not possible.”
European officials said Monday that the plan to increase energy purchases isn’t legally binding and is based on amounts the bloc believes it can accommodate. Purchases would also depend in part on U.S. infrastructure capacities, they said.
“Even if the EU were to buy the entirety of U.S. crude and LNG exports, the annual value of its purchases would total only $141 billion,” according to Gavekal Economics. It based its figures on current prices and the U.S.’s estimated year-end LNG export capacity.
There are also questions about whether the U.S. could deliver enough energy to hit the target. American LNG terminals, where natural gas is supercooled and loaded onto tankers, are already operating at near-full capacity. While companies are expanding facilities in Louisiana and Texas, this process will take several years.
On the European side, U.S. energy would encounter significant infrastructure bottlenecks. Europe’s re-gasification and pipeline networks, which receive and process LNG, are stretched to their limits, and expansion would require huge investment. The region’s refineries would also likely struggle to process extra volumes of light U.S. crude to produce diesel.
Energy Obstacles
- The US does not produce enough LNG to handle what the EU agreed to
- The EU does not have the infrastructure to handles the commitment
- EU private companies have existing long-term contracts, some still with Russia
- Ursula von der Leyden who negotiated the deal does not have signing authority.
Suckering Trump
- Ursula von der Leyden told Trump what he wanted to hear.
- A bunch of economic fools believe it will happen.
- This was a great effort by Leyden to buy time without agreeing to anything.
Trump Announces a 15 Percent Tariff Deal With the EU But There Is No Deal
Yesterday, I commented Trump Announces a 15 Percent Tariff Deal With the EU But There Is No Deal
Two Problems: Trump is exaggerating the deal. And Ursula has no signing authority.
The administration has released no documentation for deals it claims to have reached with the Philippines or Japan, and details released of the Indonesia deal last week remain incomplete. The U.K.’s framework, released in May, also left some big items unresolved, like steel tariff levels.
Is This a Good Deal?
On average no. It is idiotic to impose a 15 percent tax on US business on US consumers and businesses and call it good.
But there will be winners and losers. In general US exporters gain. US importers and consumers lose.
This is all premature because no one agrees on the details.
Is This Deal Better Than Expected?
Perhaps.
Given that Trump threatened much worse, he could have done far more damage than putting a 15 percent tax on US consumers and businesses.
Tax Cut, Tax Hike
To the extent the EU will lower tariffs on the US, that is a tax cut for the EU.
The lead chart shows Trump’s tax hikes.
The economic illiterates brag about tax hikes. Go figure.
Fundamental Flaws in Trump’s Thinking
- Trump says exporters pay tariffs. The lead chart proves otherwise.
- Trump fails to understand trade is multilateral, not bilateral.
- Trump fails to understand trade is between individuals, not nations.
- Trump fails to understand tariffs are a tax and that tax hike encourages price hikes by US producers who are too weak to compete globally.
- Trump believes a VAT is a tariff. It’s idiotic.
- Trump fails to understand there cannot possibly be any net benefit to paying more for copper, steel, aluminum.
Point 3 is critical. The EU cannot force private companies LNG or anything else from US companies.
All of the hype over a BRICS currency amounts to the same thing. A Brazilian framer selling sugar to a Chinese merchant has no need for the Yuan or a BRICS currency.
The Brazilian farmer needs the Brazilian Real because his expenses are in the Real. Alternatively, the farmer might want US dollars to buy machinery. Other than sanction avoidance, the BRICS currency has no use.
Yet Trump is threatening huge tariffs if any country uses BRICS.
It’s really pathetic to have a president who understands nothing about trade or currencies, then brags about tax hikes, with the Cult cheering. But here we are.
Related Posts
March 16, 2025: Trump Wants a Weak Dollar But Needs a Strong One
Trump wants the Fed to cut interest rates to weaken the dollar and boost exports. But that’s not what helped him get elected.
June 23, 2025: How Long Can the US Dollar Remain the Global Reserve Currency?
An article on the fundamental flaws with the euro triggered this post.
July 8, 2025: BRICS Are No Threat to US Dollar Dominance, But Trump Is
Are the BRICS Countries increasing their clout?
Addendum VATs
No, VAT isn’t a tariff – here’s what Trump (and others) get wrong
And in the US from the Conference Board: Tariffs for VAT? An Explainer
Key Vat Insights
- VAT is a neutral consumer tax applied to all goods sold domestically, while tariffs selectively penalize foreign imports by raising their prices.
- Shifting taxation from corporate and labor taxes to VAT has shown to enhance long-term economic growth and competitiveness, with 175 countries worldwide adopting VAT systems.
- The EU’s average corporate tax rate matches that of the US, contradicting the idea that Europe enjoys a corporate tax advantage at the expense of the US as a result of applying VAT.
And from the Tax Foundation The European VAT is Not a Discriminatory Tax Against US Exports
There are a dozen articles refuting BS from Trump. When Trump says anything it’s best to question it.
