The trade deal agreed between the United States and the European Union on Sunday is on its face a humiliation for Europe and a triumph for Donald Trump’s strong-arm tariff diplomacy.
But in acknowledging Europe’s strategic weakness and giving Trump a public victory, Ursula von der Leyen may have stooped to conquer.
The terms of the deal could hardly be more one-sided, with European exports to the US facing a 15 per cent tariff while American goods enter the EU with no tariff at all.
The EU also agreed to spend $750 billion (€644 billion) on US energy products like liquefied natural gas (LNG) over the next three years, to invest $600 billion (€515 billion) in the US and to buy hundreds of billions of dollars’ worth of American weapons.
READ MORE
The EU fumbled the negotiations from the start, dithering over retaliatory measures after Trump announced his “reciprocal tariffs” in April. China was more defiant, matching Trump’s tariffs and using as leverage its chokehold on rare earth minerals that many US manufacturers need.
China and the EU were never likely to work together against the US, but both trading giants resisting Trump at the same time would have had more impact than either acting alone.
Negotiations between China and the US, which continue in Stockholm this week, and the 15 per cent tariff deal with Japan this month left the EU at risk of being the last major trading partner without an agreement.
A 15 per cent tariff will make European goods more expensive for American importers but the fact that it is in line with that of other major exporters should limit its impact on their competitiveness. Keir Starmer secured a slightly lower tariff of 10 per cent, but while Britain is a major exporter of services, it is no longer a leading goods exporter.
[ EU and US reach deal on 15% tariffs, averting potential trade warOpens in new window ]
The tariff, which will be paid by American importers, is high enough to raise significant revenue for the US government, but it is probably too low to persuade many manufacturers to move their operations from Europe to the US. And there may be less to von der Leyen’s other promises than immediately meets the eye.
She said that the EU would seek to spend $250 billion (€215 billion) a year over the next three years on US energy products, but inadequate infrastructure to turn LNG back into gas could limit such imports. And the $600 billion in new European investment in the US is less a promise than an aspiration, because it will be for businesses rather than the European Commission to make those decisions.
[ Ireland ‘no doubt’ in challenging position over tariffs, says MinisterOpens in new window ]
The deal’s most important function is that it averts a trade war with the US in which the EU could never have prevailed. Some Europeans talked tough about using the EU’s Anti-Coercion Instrument (ACI) to target US services and intellectual property rights, but the threat was always an empty one.
This is because the US can meet any such dramatic escalation by the EU with its own ultimate and unanswerable threat: the withdrawal of the transatlantic security guarantee. Such a move would have been unthinkable under previous US presidents, but Trump has shown clearly that he has no ideological or emotional affinity with the idea of the transatlantic alliance.
Von der Leyen’s pledge to borrow hundreds of billions of dollars to buy more US weapons is, in one view, almost cartoonish in its illustration of Europe’s vassalage. But it may also serve to bind Washington more closely to European security interests by offering the kind of incentive Trump responds to, a financial one.
He has already made clear to Japan and South Korea that he sees the security guarantee the US offers them as a kind of protection racket and that the price is going up. His agreement to continue supplying weapons to Ukraine if the Europeans pay for them reflects the same approach to America’s alliances.
Ukraine’s Volodymyr Zelenskiy understood this when he agreed a deal with Trump earlier this year to give the US a stake in the exploitation of the country’s minerals. The idea was that, if the US has an economic interest in Ukraine’s mines, Washington will be more likely to resist a Russian attempt to seize them.
Von der Leyen’s deal doubles down on Europe’s security dependency on the US, potentially undermining any drive towards strategic autonomy. But after years of talking, that has so far amounted to little more than a commitment to reorientate much of Europe’s industry towards defence, funded by debt.
[ How EU and US news front pages see the tariffs dealOpens in new window ]
What Europe needs is a candid debate about its strategic future that goes beyond how to become a more self-reliant subaltern to the US. Fifty years after the Helsinki Accords, it will require imaginative but clear-sighted thinking about how to share the Eurasian land mass with Russia.
The EU needs to look again at its relationship with China and whether its identification of Beijing as a partner for co-operation, an economic competitor and systemic rival remains the most useful one. The EU is now closer to China than the US on a growing number of policy areas, including climate change, the rules-based trading system and development aid.
A strategic review would also examine the EU’s relationship with the Global South and particularly how its influence is diminishing in Africa at a time when that continent’s economic potential is becoming more evident. And the emerging reality of a multipolar world demands a new relationship with middle powers like those in the Brics based on mutual respect, rather than Europe’s increasingly implausible sense of moral superiority.
There is little sign of such fresh strategic thinking at the top of the EU, least of all by von der Leyen. In the meantime, her deal with Trump reflects the primacy of Europe’s current interest in maintaining and securing its partnership with the US, unequal and undignified as it may be.
