The Trade Guys: EU-U.S. Tensions, Economic Indicators, and Zeroing Out Tariffs

Podcast: The Trade Guys (CSIS)
Episode Date: September 15, 2025
Summary by: [Your Name]

Episode Overview

In this episode, trade policy experts Scott Miller and Bill Reinsch address the rising tensions between the U.S. and the European Union following the Trump-von der Leyen trade deal, explore the current economic landscape in the wake of recent tariffs, and discuss the implications of the Trump administration’s executive order zeroing out specific tariffs. The discussion delivers candid analysis, practical explanations, and signature banter, with touches of both optimism and realism.

Key Discussion Points & Insights

1. The U.S.-EU Trade Deal and WTO Tensions

(03:31–13:04)

• Europe’s Position and the WTO Violations
  • Bill outlines the European parliament’s concern that the new US-EU trade agreement violates the WTO’s Most-Favored-Nation (MFN) principle (03:31).
  • The agreement provides tariff reductions specifically for the U.S., but not for other WTO members, which is against WTO rules.
  • Quote:
    “There’s bad news and there’s less bad news. And Sabina [Vand] was sort of saying this is in the less bad news category.”
    — Bill Reinsch, (05:14)
  • Europe has two legal avenues: make concessions universal (politically unpopular, especially concerning China) or try to structure the deal under GATT Article 24, which permits preferential deals if they cover “substantially all trade”. Most such deals, including EU’s, often don’t fully comply.
• Practical Realities
  • Bill notes this is a case where “everybody cheats” regarding Article 24 compliance, lessening the chance of meaningful consequences from the violation.
  • Scott adds that the EU’s single market had massive benefits but stalled, failing to provide a meaningful “second act” in terms of trade liberalization, hampering negotiating power at the WTO.
  • Quote:
    “At the end of the day, I understand why they’re upset about it, but I’m not sure what there is to do at this point.”
    — Scott Miller, (12:18)
• Possible Outcomes
  • Bill predicts the EU parliament will grumble but likely approve the agreement, but warns digital trade issues haven’t been resolved and may cause more friction in the near future.

2. EU Digital Regulation & U.S. Frustrations

(13:04–20:43)

• Digital Services Tax & Regulatory Stringency
  • The deal punts on digital trade disputes, including the Digital Services Tax (DST) and regulations like the Digital Markets Act (DMA) and Digital Services Act (DSA).
  • European regulators remain committed to their approach, despite U.S. objections.
• Fines Against U.S. Tech Firms
  • Recent record EU fines against U.S. firms (Google, Apple, Meta) deepen the rift.
  • Bill points out the irony—U.S. political attacks on tech giants shift to strong defense when the EU penalizes them.
  • Quote:
    “Google was just fined around US$3 billion… and that follows fines to Apple and to Meta as well. Europe is developing a history here of substantial fines against American platforms.”
    — Bill Reinsch, (15:38)
• Regulatory Overreach
  • Scott likens EU digital regulation to “diminishing returns,” suggesting the DMA/DSA go too far and are targeted at successful non-European firms.
  • Uses the “Animal House” analogy:
    “President Trump no doubt sees Apple and Google and Meta as our pledges. So…while he has some issues with them, he doesn’t want anybody else in that space.”
    — Scott Miller, (19:59)

3. Economic Impacts of Tariffs

(21:05–29:23)

• Tariff Effects So Far
  • Scott: The impacts have been moderated because:
    • Tariffs applied are lower than the “headline” threats (except on China).
    • Other countries have largely avoided retaliating.
  • Quote:
    “Most of the models…modeled retaliation because that’s what everyone expected to happen. And somehow they’ve managed it in a way that didn’t happen.”
    — Scott Miller, (21:47)
  • Canada and Eurozone economies are suffering more than the U.S.; sluggish growth is greater in Europe’s unreformed services sector.
  • The U.S. has a “Goldilocks” economy—moderate inflation, strong markets, and jobs data align with expectations.
  • Scott expects wage pressures for entry-level workers due to migration policy and sees the U.S. economy as “not too hot, not too cold, maybe just right.”
• Caution & Longer-Term Risks
  • Bill is more pessimistic, suggesting negative effects may hit in Q4, notably during the holiday season.
  • Points to risk of “stagflation” due to persistently high inflation and a cooling labor market.
  • Quote:
    “If there’s going to be an impact…and I think there will be, but it will be in Q4 more than Q3, and I think we’ll see it mostly in holiday shopping.”
    — Bill Reinsch, (26:18)
  • Warns global economic sluggishness will feedback to the U.S. by lowering demand for exports.

4. Executive Order: Zeroing Out Some Tariffs

(29:25–34:33)

• Policy Rationale
  • Trump’s executive order removes tariffs on goods not available or insufficiently produced in the U.S.
  • Scott calls it “eminently sensible,” comparing it to Canada’s longstanding zero-tariff policy for needed imports.
  • Quote:
    “It is patently stupid to collect tariffs or to raise tariffs on goods that are necessary for inputs for your production and have no domestic source.”
    — Scott Miller, (29:59)
• Historical Barriers
  • Bill explains earlier attempts like the Miscellaneous Tariff Bill stalled due to increasing reluctance to “benefit China,” even though the relief mostly helped American manufacturers.
  • Points out that zeroing tariffs on items like coffee and tropical fruits, where the U.S. has no domestic production, directly benefits consumers.
  • Quote:
    “From the standpoint of the American consumer…coffee, tropical fruits, and vegetables…those are gonna stay cheaper than they would be otherwise, and that’s a win for everybody.”
    — Bill Reinsch, (33:20)
  • Both agree it’s a practical and positive policy move.

Notable Quotes & Moments

• Animal House Analogy:
  “Hey, they’re abusing our pledges. They can’t abuse our pledges. Only we could abuse our pledges.” (19:42)
• On-Brand Banter:
  “We don’t pontificate, we rant. Let’s be clear about that. There’s a difference.”
  — Bill Reinsch, (21:05)
• Policy Clarity:
  “There’s no free lunch out there or breakfast.”
  — Scott Miller, (29:17)
• Humor on Political Ratings:
  “Thanks to our listeners, all two of you, for making us number two in the ratings. So we’re grateful for it and we’re going to keep going.”
  — Bill Reinsch, (02:25)
• On Tariff Reduction:
  “Well, thanks to President Donald J. Trump, you can have as many bananas as you like.”
  — Evan Brown, (34:27)

Important Timestamps

• [03:31] — EU parliament’s critique of WTO incompatibility
• [05:14] — Bill’s summary of "less bad news" defense
• [12:29] — Scott’s perspective: why Europe “lost” in the deal
• [15:38] — Bill on EU fines for U.S. tech giants
• [19:42] — Animal House analogy for U.S. tech firms
• [21:47] — Scott on economic analysis of tariffs
• [26:18] — Bill’s forecast for Q4 economic impact
• [29:59] — Scott on the sense of zeroing out input tariffs
• [33:20] — Bill’s summary of positive consumer impact

Takeaways

• The new US-EU trade deal is drawing sharp criticism from the EU—and technically violates WTO rules—but is likely to persist due to lack of political appetite for alternatives.
• EU digital policy remains a flashpoint, with American companies in the crosshairs of heavy regulation and fines; the U.S. government dislikes it, but change is unlikely soon.
• Tariffs so far have had a limited negative effect in the U.S.—and a larger hit abroad—but significant risks remain, especially if trade partners’ economies weaken further.
• The Trump administration’s move to eliminate tariffs on goods not produced in the U.S. is a rare sensible policy moment that offers consumer and producer relief.

Tone & Style

The Trade Guys blend clear-eyed policy analysis with a conversational, sometimes cheeky, tone. Both Scott and Bill offer pragmatic takes, historical context, and a willingness to “rant” rather than pontificate. Listeners get insight with a dose of wit.

For further inquiry:

• The current and future status of the US-EU digital regulatory relationship
• Ongoing economic data on tariffs and consumer impacts, especially into Q4 2025
• The efficacy and political sustainability of zeroing out tariffs amid larger protectionist trends