Posted originally on Apr 18, 2025 by Martin Armstrong 

While the press bashes Trump over the tariffs and trade war, they continue to ignore the facts and will always take the opposite position from Trump. If Trump said he wanted everyone to live an extra 5 years to help the economy because of declining birth rates, the Press would advocate mass suicide like Jim Jones’ Jonestown, just to prevent anything Trump does.

Starmer, the good Marxist follower, wants to reverse BREXIT, but knows that would be difficult. So he wants to join in trade and adopt all the regulations that the EU imposes, that has suppressed their economy from ever growing. As I have said, out of every $10 spent by consumers globally, the EU accounts for only $1.20 – a fraction of America, despite having 450 million people compared to the USA’s 330 million.

Even on a purely economic basis, Starmer is turning his back on the USA, which has a consumer market more than twice the size, for more regulations that will reduce trade with the USA. This is clearly not an economic decision – this is a Marxist political decision. Starmer is fulfilling our long-term forecasts. This year was a Directional Change, and next year is a Panic Cycle.

Europe has historically been the most hostile when it comes to trade. They cling to Marxism, and when they can’t justify tariffs, they regulate against allowing American products in. When Charles de Gaulle in 1966 said no American/NATO nukes in France, and he ordered all American military personnel to leave France, they asked if that applied to the dead Americans buried there to free France. This has been the position of the French elites. They still view the world as speaking French if Napoleon had won. They have not gotten over that.

To this day, Macron is the most hostile, and he wants France to replace the United States, offering their nuclear power to shield Europe from Russia. This is why Macron was the first to say he wanted to send troops into Ukraine, knowing that would start World War III.

The European Union (EU) does not impose a blanket ban on all food and veterinary products from the United States. However, it does enforce strict regulations that can result in restrictions or prohibitions on specific products that do not meet EU standards. Key points include:

1. Hormone-Treated Beef: The EU prohibits beef from cattle treated with growth-promoting hormones, a common practice in the U.S. This has been a longstanding trade dispute.
2. Chlorine-Washed Poultry: The EU bans poultry treated with antimicrobial rinses (e.g., chlorine washes), favoring stricter farm-to-table hygiene controls instead.
3. GMOs (Genetically Modified Organisms): The EU requires rigorous authorization and labeling for GMO products, limiting some U.S. agricultural exports unless approved.
4. Ractopamine in Pork: The EU prohibits meat from animals treated with ractopamine, a feed additive used in the U.S. to promote lean muscle growth.
5. Veterinary Medicines: Restrictions apply to certain antibiotics and hormones used in livestock for non-therapeutic purposes, aligning with the EU’s precautionary principle and emphasis on animal welfare.
6. Mutual Recognition Agreements (MRAs): Since 2019, some veterinary products are covered by MRAs, easing trade for compliant products. However, U.S. exporters must still meet EU standards.

These measures reflect differences in regulatory philosophies that are used in reality as trade barriers. The EU prioritizes its regulations, knowing that there are different standards internationally. Trade negotiations (e.g., TTIP) have sought to bridge these gaps but with limited success. The restrictions are not actually becoming outright bans by requiring compliance with EU rules, which are stringent to prevent trade that pretends it is not the goal.

After World War I, European countries began imposing high tariffs in the early 1920s as part of a broader shift toward economic protectionism, driven by postwar reconstruction challenges, political instability, and efforts to shield domestic industries. France implemented significant protectionist measures, particularly through the 1927 Tariff Law (Loi du 3 août 1927), which marked a major shift toward economic nationalism. This law replaced the earlier Méline Tariff of 1892. It was enacted in response to post-World War I economic challenges, including the need to protect domestic industries and agriculture from foreign competition. At the same time, France was pushing the United States Federal Reserve to lower interest rates (G4) in an attempt to reverse the capital inflows to the United States.

The tariff increases were enacted in 1927, though France had maintained generally protectionist policies throughout the 1920s. The 1927 law formalized and expanded these measures sharply. The 1927 tariffs were part of a broader European trend toward protectionism in the interwar period. The 1927 law introduced a flexible tariff system, allowing the government to adjust rates based on reciprocal trade agreements or retaliation against foreign protectionism. Tariffs were applied differentially, with higher rates on agricultural goods (to protect French farmers) and certain industrial products.

France’s Agricultural products saw the implementation of tariffs on items like wheat, meat, and wine. These rose significantly, with some rates exceeding 30% (e.g., wheat tariffs increased to protect against cheaper imports from Eastern Europe and the Americas). The Industrial goods saw rates that were less restrictive yet still varied widely, targeting textiles and machinery. These sectors saw tariff rates between 15% and 25%, depending on the product and origin.

France also combined tariffs with import quotas (e.g., for coal and steel) to shield its economy further. Overall, France has always been the most protectionist of all European nations. Its cost of living is above average in the EU. According to Eurostat’s 2022 data, France’s price level index (with the EU average set at 100) was 116.5, placing it above the average but below several other EU countries. This compares to Denmark (141.7), Ireland (138.7), Luxembourg (134.0), Sweden (128.9), and Finland (123.3). The devil is in the details. While Paris is one of the EU’s more expensive cities to live in, the national average is lowered by cheaper costs in other regions.

The 1927 law made France one of the most protectionist economies in Europe by the late 1920s. While this was effective in shielding domestic sectors, these policies contributed to reduced international trade and economic fragmentation, exacerbating global tensions, leading to the Great Depression, and the US response in June 1930 by the Smoot-Hawley Act.

In the United Kingdom, there was the 1921 Safeguarding of Industries Act, which imposed tariffs on “key industries” like chemicals and optical goods deemed vital for national security. This was Post-WWI Economic Struggles, in which Britain lost the status of the Financial Capital of the world to New York. After the war, Britain faced industrial decline, unemployment, and foreign competition. Key industries critical during the war (e.g., chemicals, optics, scientific instruments) were all at risk of collapse. The Brits raised the National Security concerns of over-reliance on foreign imports for strategic goods, and this was the argument to impose tariffs to try to resurrect their industries.

Tariffs on Imports under this act imposed a 33.3% tariff on imported goods in strategic sectors, including chemicals, optical glass, and scientific instruments. This aimed to make foreign products less competitive and protect British industries. They also targeted industries that they deemed vital for national defense and economic resilience, reflecting lessons from wartime shortages. The Act was passed under Prime Minister David Lloyd George’s coalition government, though it aligned more with Conservative Party tendencies toward protectionism, marking a shift from Britain’s traditional free-trade stance.

The Act had mixed results at best. While it provided temporary relief for protected industries, critics argued it was too narrow, benefiting only specific sectors. Consumers faced higher prices, and retaliatory tariffs from other countries harmed British exports. The limited scope initially covered 6,000 items but was seen as insufficient to address broader industrial decline. Amendments in 1925–1926 expanded coverage to include more goods like lace and gloves. This Act shifted toward protectionism as Britain abandoned free trade, foreshadowing more extensive protectionist policies during the 1930s that followed the 1932 Import Duties Act, which expanded tariffs to most imports (except from the British Empire), formalizing protectionism during the Great Depression.

In the United States, the strong dollar resulted in making foreign goods cheap. The 1921 Act in Britain led to the US response in 1922. The Fordney-McCumber Tariff of 1922 was a significant piece of U.S. legislation that raised tariff rates on imported goods to protect American industries in the aftermath of World War I. It was signed into law by President Warren G. Harding in September 1922. Republican Congressman Joseph Fordney and Senator Porter J. McCumber have sponsored it. This reversed the lower tariffs of the 1913 Underwood Tariff.  The tariff increases: did elevate import duties to historically high levels (averaging about 38.5%), targeting both agricultural and industrial goods to shield domestic producers from foreign competition due to the strong dollar. This tariff provided a flexible authority granted to the president, allowing him to adjust tariff rates by up to 50% based on recommendations from the U.S. Tariff Commission, although this flexibility was rarely used.

While tariff hikes began in the early 1920s (e.g., the UK in 1921), they did not prevent the bull market, nor did they prevent the Great Depression. This protectionist spiral fragmented global trade and worsened the Great Depression, but certainly did not create the economic crisis.