EU's Sefcovic on trade talks: It takes two hands to clap

The EU was hit with a 30% tariff effective August 1 over the weekend.

EU's trade chief Sefcovic on the trade talks with the US does not sound all that optimistic saying:

• It takes two hands to clap.
• Plan to confer with US counterparts later on Monday on state of play
• Believes there is still potential to continue US trade negotiations

President Trump is walking a fine line with his belief that inflation will remain contained despite the imposition of broad trade tariffs. At the same time, he’s touting the fiscal benefits of those tariffs, which are filling Treasury coffers with what he views as long-overdue revenue. Trump has made it clear that he’s enthusiastic about the financial windfall, often emphasizing the inflow of funds with characteristic flair.

The strategy appears to be one of maintaining tariffs at relatively high levels—perhaps slightly below the “Liberation Day” rates, but still close enough to exert leverage. This leaves room for countries to negotiate lower rates, yet the underlying message remains that there will always be some cost for access to the U.S. market. In Trump's view, trade has been imbalanced for decades, and the new tariff regime is a way of evening the scales.

He’s also reframing tariffs not merely as punitive measures, but as a kind of tax for doing business in the United States. This tax, he argues, should be paid by foreign companies that benefit from access to the American consumer. The only way around it, according to Trump, is for those companies to fully produce and sell their goods within the U.S.—a move that would eliminate imports and, with them, the tariffs.

The delay tactic—pushing the full implementation of tariffs to August 1, with the potential for further extensions—serves multiple strategic purposes. It allows importers to front-run the tariffs, keeping supply elevated and mitigating inflationary pressures from the higher tariffs. If companies do raise prices, Trump can then publicly chastise companies that raise prices, positioning himself as a defender of the American consumer. If inflation remains subdued, he can claim victory over the Fed’s warnings and use that as political ammunition to pressure Jerome Powell—or even replace him—with someone more willing to cut rates.

Then there is defense....Trump appears to be shifting away from the idea of providing free military support in the name of defending democracy. His approach to NATO is transactional: if member nations meet their financial obligations, the U.S. will support them—but not through open-ended, troop-heavy involvement. Instead, Trump prefers to back democratic allies by selling NATO and other countries weapons. This strategy allows him to embrace conflict from a distance—supporting wars without committing U.S. boots on the ground AND selling goods further lowering trade imbalances.

There may be isolated exceptions, such as the one-off use of advanced weapons like the bunker buster strike seen in prior years, but even then, Trump would likely prefer allies to carry out the action themselves using American-made arms. It’s a vision of foreign policy that embraces strength, profit, and control—without the burden of direct military entanglement.

Just my interpretation of his thinking—and how the plan seems to be taking shape. This article was written by Greg Michalowski at www.forexlive.com.