Three things have happened in the past three months that are best understood together.

The International Atomic Energy Agency issued a historic resolution against Iran for violating its commitment to nuclear non-proliferation.

Additionally, OPEC+ agreed to increase production threefold despite weak global oil demand growth, reaching the equivalent of the entirety of Iran’s exports in immediately available excess capacity, looking to offset any disruption in global oil markets from any conflict with Iran. 

Furthermore, several Sunni neighbouring nations have reached historic agreements with the United States and allow Israeli and American aircraft to fly over their airspace and use their bases.

OPEC+’s decision to offset the risk of disruption in Iran’s exports has two clear objectives: strengthen Saudi Arabia’s position as the global central bank of oil and limit any damage to China’s oil supply. China buys 90% of Iran’s oil exports.

Allow me to remind you of a few uncomfortable truths.

Government spending is out of control in developed nations. Furthermore, no interventionist government wants to cut spending or balance the budget. Government spending empowers politicians, and reducing it means losing the grip on the economy.

Interventionist governments aren’t concerned about debts, deficits, or inflation. Inflation is a deliberate policy, and interventionist governments seek to nationalize the economy while imposing total control over productive sectors by issuing continuously devalued currencies.

The EU-US trade deal should have been the easiest to complete.

However, the deal is not progressing because the negotiation team refuses to lift any of the EU’s non-tariff barriers or to discuss the limitations imposed on US agricultural, livestock, and car exports.

These are the reasons why it should have been a concise and quick trade deal:

. Most of the United States’ team demands coincide with the Draghi report’s concerns about excessive regulation and internal barriers. According to Eurochambres estimates, the cost of hyper-regulation for the EU exceeds one trillion euros per year. Draghi himself warned in an FT article, “Forget the US—Europe has successfully put tariffs on itself,” citing IMF estimates that show that internal barriers, regulation, and taxation increase prices in the services sector by 110 per cent and in manufacturing by 45 per cent.

Inflation is not soaring, and economic growth is solid.

The Tariff Tantrum has proven that consensus was wrong about soaring inflation and an economic slump. Why? The exaggerated perception of tariffs’ economic impact stemmed from the belief that American consumers would bear the full burden of tariffs. Why were they wrong?

The first reason was that most analyses relied on a simplistic calculation of tariffs, treating supply chains as if they only involved buyers and sellers. Supply chains are very complex, and most exporters must deal with overcapacity challenges and working capital problems. Thus, the impact of tariffs is likely to be absorbed by numerous links in the supply chain, including transport, storage, distribution, manufacturing, retailers and purchasing chains.

Furthermore, most exporting companies face a significant problem of overcapacity and working capital; if they don’t sell their products fast and effectively, their debt soars, and the losses at warehouses can lead to a chain of bankruptcies.