My condolences to everyone who spent days trying to play 5D chess with Donald Trump’s market-exploding tariff mess. Where Trump is involved, there is a cloud of malevolent chaos, and there is grift amid the chaos. What grandmasters there are to be found are almost certainly grandmasters of grift.When marketsdump $10tn in three daysand then gain trillions back in a single afternoon on the erratic decisions of one deeply corrupt person, you can be sure that a small number of people have made immense sums of money out of that volatility. Were the people responsible for abnormal spikes of buying into the markets (including call optionson various indexes and exchange-traded funds) on Wednesday morning – and again, 20 minutes before the tariff announcement went public – extraordinarily lucky? Were they in the right Signal group? Or were they just simplyfollowing Trumpon Truth Social, where he posted: “THIS IS A GREAT TIME TO BUY!!! DJT” –just a few hours before dropping the news that he waskind ofpulling back.The first takeaway for the EU – beyond the potential stock tips – is that Trump will back down under pressure. So don’t grovel: the 10% universal tariff is still there, as are last month’s tariffs on steel and aluminum, so why has the EU unilaterally stepped down itsretaliatory tariffswithout a corresponding step-down from the US?Trump, of course, is spinning his partial U-turn as a result of “these countries … calling me, kissing my ass”,as he braggedto a gathering of congressional Republicans on Tuesday night. I have no doubt that Trump – whom hundreds of mental health professionals have described as having such a striking and serious case ofmalignant narcissismthat they were willing to break a professional rule and diagnose him from a distance – would have loved for that to be true. But let me go out on a limb and say that it wasn’t the ass-kissing or any “deals”. It was that investors and funds the world over were fleeing anything and everything linked to the US – including its sovereign debt.Trump is pushing the world towards recession. By learning the lessons of 2008, we can still prevent it | Gordon BrownRead moreThere is a longstanding phenomenon whereby Europe tends to overvalue the US’s power and underestimate its own. Europe neither “kissed ass” nor retaliated over the “liberation day” tariffs; it observed as the market carnage and threat to US Treasury bonds punched a hole in the idea of the US as impregnable. Imagine how much faster the flood away from the US and to safety elsewhere (including the euro) would have been if the EU hadimmediately usedits so-called bazooka, theanti-coercion instrument– a powerful new regulation that would allow it to target US services industries such as banking and tech.The second takeaway is that the rest of the world is ready to bypass the US’s chaos and unpredictability – it just needsEuropeto be the alternative. What Trump also does not understand is that the US may have a trade deficit, but it was a net exporter of trust – until it blew up an interlocking economic and security order that it had designed, built and maintained over eight decades – and of which it was the primary beneficiary. As a result, the view from Brussels now is that “there is no long-term credibility” with the US, Claus Vistesen, of Pantheon Macroeconomics, told me.Europe, on the other hand, plays by the rules. In the long run the more dents Trump pounds into the rule of law and the idea that the US is stable, rather than erratic, the stronger the euro’s argument for replacing the dollar as the world’s reserve currency. Which brings me to the third takeaway.In the face of the Trump administration’s very real animosity towards it, the EU must act as swiftly as possible to shore up its greatest weakness: its dependence on fossil-fuel imports. Sometimes, the animosity is almost laughably tragicomic, such as when US commerce secretary Howard Lutnickranted that Europeans“hate our beef because our beef is beautiful and theirs is weak”. Other times, it’s more transparent, such aswhen Trump claimedthere would be no negotiations unless the Europeans “pay us a lot of money on a yearly basis, number one for present, but also for past”. As in, in Trump’s mind,$350bn in annual purchasesof US natural gas in exchange for lifting tariffs.Over the past few months, the refrain that governments should weaken climate regulation in order to promote growth has picked up. This would be a truly pyrrhic victory – primarily because Europe is acutely vulnerable to climate breakdown, the human and financial costs of which are staggeringly worse at every half-degree of heating, but also because the EU’s dependence on imported fossil fuels – from Russia, or from the US – is a glaring strategic and economic weakness. In fact, the grand irony of Trump’s pro-fossil fuel agenda is that he has exploded the green re-industrialisation that actually was taking place, thanks to Joe Biden’sInflation Reduction Act, leaving the door wide open for someone else.So, to paraphrase the tech bros, if Trump is going to move fast and break things, then let’s move fast andbuildthings.“Europe can turn this into a window of opportunity to further its edge with the US on clean tech,” says Simone Tagliapietra of the Brussels thinktank Bruegel. He advocates for adecarbonisation bank, completing the single market as urged by Mario Draghi, and issuing new eurobonds.The mantra going forward should be “whatever it takes” to fully replace fossil fuels with renewables – designed in Europe, built in Europe – so that it never spends $350bn to import gas from the US, Russia, or anywhere else.Alexander Hurst is a Guardian Europe correspondent
The big lesson for Europe? Trump backed down under pressure | Alexander Hurst
TruthLens AI Suggested Headline:
"Europe Must Adapt to Economic Uncertainty Amid Trump's Tariff Decisions"
The Guardian
5.7
TruthLens AI Summary
The recent fluctuations in global markets, heavily influenced by Donald Trump's tariff announcements, reveal significant lessons for Europe regarding its economic strategy and dependence on the United States. Trump's erratic decision-making has demonstrated that he is susceptible to pressure, as evidenced by his partial retreat from proposed tariffs after market reactions. This volatility has created opportunities for savvy investors who capitalized on market swings, raising questions about the integrity of trading practices during such chaotic periods. Despite Trump's claims of being revered by foreign leaders, the reality is that his administration's actions are prompting investors to reconsider their ties to U.S. assets and securities. This shift underscores a growing sentiment in Europe that the U.S. may no longer be the predictable ally it once was, particularly in light of the potential for a recession stemming from Trump's policies.
Moreover, Europe must recognize its own strengths and take decisive action to enhance its economic independence from the U.S. The article highlights that Europe has historically undervalued its own power in the global economic landscape. While Trump continues to promote a fossil fuel agenda, Europe has the opportunity to accelerate its transition to renewable energy sources, thereby reducing its reliance on imported fossil fuels. This strategic pivot not only aligns with climate goals but also positions Europe as a viable alternative in the global market, potentially challenging the U.S. dollar's status as the world's reserve currency. By capitalizing on this moment, Europe can bolster its economic resilience and establish a more stable and sustainable future, focusing on clean technology and energy independence, while moving away from dependency on U.S. resources and political whims.
TruthLens AI Analysis
The article explores the complexities surrounding Donald Trump's recent tariff decisions and the broader implications for Europe. It highlights the chaotic nature of Trump's actions and the resultant volatility in the markets, suggesting that his retreat under pressure reveals important lessons for European leaders.
Implications of Trump's Actions
The piece emphasizes that Trump’s retreat from a more aggressive tariff stance indicates that he can be influenced by external pressures, particularly from market reactions. This presents a potential strategy for European leaders: rather than yielding to pressure, they might stand firm against Trump’s tariffs. The author questions the rationale behind the EU’s unilateral reduction of retaliatory tariffs without similar concessions from the US, hinting at a potential miscalculation or a lack of strategic response on the EU's part.
Market Volatility and Manipulation
The article also raises concerns about market manipulation in response to Trump's erratic behavior, pointing out the significant financial gains made by individuals who anticipated Trump's market-moving tweets. This suggests a landscape where insider knowledge or timing can create vast disparities in wealth, drawing attention to the ethical implications of such volatility.
Psychological Underpinnings
Trump's personality, described as having "malignant narcissism," adds another layer to the understanding of his decision-making process. The author implies that Trump's need for validation and admiration could be leveraged against him, suggesting that he might respond better to collective pressure rather than individual negotiations.
Public Perception and Trust
The article aims to shape public perception by illustrating the unpredictability of Trump’s policies and the subsequent impact on global markets. It seeks to foster a sense of skepticism towards both Trump’s motives and the EU’s response strategies, thus encouraging a more analytical approach to international trade relations. This could lead to a broader public discourse about the effectiveness of current strategies in dealing with the US administration.
Potential Impact on Stakeholders
Investors and market analysts are likely to be impacted by the insights provided in the article, as it underscores the importance of understanding the political landscape when making financial decisions. The mention of specific stocks and sectors could inform trading strategies, especially in industries heavily affected by tariffs, such as steel and aluminum.
Global Power Dynamics
The article subtly touches on the shifting power dynamics between the US and Europe, suggesting that the EU’s response—or lack thereof—could have lasting implications on their relationship and the balance of power in international trade. This context is particularly relevant given ongoing discussions about global trade policies and partnerships.
Conclusion on Manipulation and Reliability
While the article presents a critical view of Trump's leadership and its implications for Europe, it also raises questions about the motivations behind the EU's actions. The language used is pointed and critical, which may indicate a bias. However, the analysis is grounded in observable market reactions and psychological insights, lending it a degree of credibility. Overall, the article may have a manipulative tone, aiming to provoke certain sentiments against Trump's administration and encourage a reevaluation of strategies by the EU.