I have been wondering since Donald Trump threatened his 200% tariffs on goods imported from the European Union how long it will be before he backs down.
He does so, after all, on most of his absurd threats, especially when people stand up to him, as Canada did recently.
Indeed, in the short time between my writing this and you reading it he may already have reversed.
One imagines, though, that Mr Trump’s clientele in America’s Rust Belt do not routinely swill bottles of Dom Pérignon or Haut-Brion, or lavish Hermès scarves, Chanel handbags, Cartier watches or Louis Vuitton luggage on their wives and mistresses.
However, I bet many high rollers who line the Republican Party’s coffers do, and even they may blanch at the consequent price rises, such as when asked to pay $180 for a bottle of Pol Roger ‘White Foil’.
Eventually, the pressure to think again will become overwhelming.
The checkered history of tariffs
Mr Trump’s intellectual shortcomings include his not realising that there is no example in modern western economic history of tariffs on imported goods improving the economy of the country imposing them.
If you impose tariffs, your trading partners retaliate and put them on you.
The British learnt this early.
When Sir Robert Peel repealed the Corn Laws in 1846, removing tariffs from imported cereals to make bread cheaper and stop much of Ireland starving in the Potato Famine, it caused Britain’s trading partners to cut tariffs too.
The result was 27 consecutive years of growth that transformed the economy of mid-Victorian Britain. Mr Trump will learn this sooner or later, even though it is not in his nature to admit it.
French wine vulnerable
France’s luxury goods industry – be it finished items, scent, fine wines and cognacs – never mind other non-luxury exports such as motor cars and food – will in the short term be adversely affected by the Trump tariffs, unless he rapidly relents.
Some retaliation has already taken place, though to the disapproval of the French prime minister, François Bayrou.
He was unhappy that Brussels (France has no say in the matter) slapped a tariff on Kentucky bourbon: this happened before Mr Trump’s tariffs, and he felt it only encouraged him to attack France’s drinks industry, which has considerable economic importance.
It was also partly because the spirit was no threat to the French drinks market (if you prefer bourbon to a fine cognac or armagnac then you are probably already incorrigible, and good luck to you), and partly because he sensed this advance retaliation might only make things worse.
Cognac producers are having particular problems, since they are also fighting a trade war with the Chinese, who targeted the drink when the EU put a tariff on Chinese-produced electric vehicles.
That, as other trade wars have shown, depends on the force of the retaliation.
Fighting back against tariffs
During his presidency Barack Obama put a tariff on Chinese tyres, because they were cheaper and just as good as any tyres America could produce.
The Chinese responded with the equivalent of a nuclear strike on US imports, and the tyre tariff rapidly disappeared.
If the EU is to have any effect on America it would have to put tariffs on more than US whiskey.
Otherwise, the effect is minimal and pointless; and to add insult to injury France does not, as a member of the EU, even control its own trade policy.
The EU tariff is also going on goods such as jeans and Harley Davidson motorcycles, and one waits to see how far that will affect the US economy.
Canada is also in a heated battle with Mr Trump over his tariffs, and the country’s new prime minister, Mark Carney, has already visited Paris to discuss strategy with President Macron: Mr Trump’s bullying has succeeded in uniting those affected by his tariffs in a way little else, even Russia’s invasion of Ukraine, has managed to do in recent years.
But if Mr Trump persists in his threat of 200% tariffs, wine producers in France predict the end of their trade with the US.
Not only would that spark anger at Mr Trump among some of those who have so far supported him, or have at least turned a blind eye to his absurdities, but it would destroy jobs and hamper wealth creation in France, where the economic picture was already hardly rosy.
Boost to defense spending
And Mr Trump’s policies have brought another problem for France in the even more vital area of defence.
France is one of the European powers seeking to offer support to Ukraine as fears grow that Mr Trump, ignorant of Russia’s threat to America’s own security, never mind Europe’s, prepares to sell Ukraine out.
He was right to demand that Europe’s Nato members pay more towards their own defence.
It was shocking how rich countries have for decades sponged off the US and blown money on lavish welfare benefits (such as France’s ridiculously low retirement age, which is already the subject of controversy for the Bayrou administration) instead.
It is no bad thing for France, or for the other countries affected, that there should be this dose of reality.
However, the fact that France is now issuing a booklet on what to do in the (still unlikely) event of an invasion shows just how febrile the advent of Trump 2.0 has been for countries that thought they were America’s allies.
Mr Trump is in the White House for another three and three-quarter years, barring some unpredicted intervention.
And unless his own Congress and colleagues manage to take him in hand there will be a lot more uncertainty and upheaval from him.
As France thinks about whom it might choose to replace President Macron in two years’ time, it would do well to bear in mind the qualities that person will require not just to stand up to this bully, but also to influence more sensibly some
of what is going
on in Brussels.
