What Can Illa's Govern Really Do Against Trump's Tariffs

The recent imposition of tariffs by Donald Trump has caused great expectation throughout Europe, and Catalonia is no exception. The President of the Generalitat, Salvador Illa, has committed to joining the main economic and social agents to analyze the situation. Although the Generalitat has certain competencies, the real response will depend on coordination with the Spanish Government and the European Union.

Catalonia Facing an Uncertain Scenario: Key Sectors at Risk

Catalonia, as one of Spain's strongest economies, could be seriously affected by the tariffs. Sectors such as machinery, cosmetics, and pharmaceuticals are especially vulnerable due to their strong commercial relationship with the United States. Additionally, exports of cosmetics and pharmaceutical products have grown significantly in recent years, but an increase in tariffs could halt this growth.

According to Acció data, 15% of Catalan cosmetics exports are directed to the United States, and 8% of pharmaceutical exports also have the U.S. market as their destination. These sectors could suffer a significant loss if tariffs increase.

One of the most affected sectors could be the agri-food sector, which represents an important part of Catalan exports. In this regard, the Govern has already begun preparing proposals to counteract the negative effects. These include possible support measures for affected companies and the search for new markets to diversify exports.

What Can the Govern Do? Coordinate and Be Willing

Although Illa's Govern has an important voice in the internal political discussion, its ability to act independently against Trump's tariffs is limited. Foreign trade policies fall within the competencies of the Spanish Government, which in turn coordinates with the European Union. This implies that, although the Generalitat can work on solutions at the local level, key decisions will be made in Madrid and Brussels.

At the European level, the reaction to Trump's tariffs has been strong. The President of the European Commission, Ursula von der Leyen, has described Trump's measures as "devastating" and has promised a firm response. This implies that Catalonia will have to coordinate its strategy with Brussels' guidelines, especially in reducing the impact.

An Alternative Interpretation of Trump's Move

"Trump is crazy," many say, arguing that the tariffs reduce the imperial position of the United States and also expose it to higher internal inflation. This analysis might make sense if the United States didn't have the world's biggest credit problem. The world's police, thanks to the imposition of the dollar, has the largest debt bubble in history.

In this circumstance, some voices have circulated a different interpretation of Trump's plan. The plan would have a goal and a tool. The goal is the internal reindustrialization of several degraded areas of the U.S., and the tool would be a short-term recession.

If the stock market cools down (which is happening with absolute clarity), it is very likely that expectations and the wealth effect will cool down. This leads to a decrease in consumption and spending, therefore reducing inflation. Consequently, the Fed can lower interest rates so that the Trump Administration can refinance American debt more cheaply and thus gradually eliminate the deficit without traumatic measures.

If this is true, Trump would not only not be crazy, but he would be purging the American economy for sustained long-term growth. The only unknown in this interpretation is whether Trump can cleanse the economy without breaking anything along the way.