EU capitulates to Trump in vassal-state trade deal

AllAfrica

2 days ago

European Commission President Ursula von der Leyen agreed to a framework deal with the US whereby the EU will be charged 15% tariffs on most imports, commit to purchasing US$750 billion in US energy exports and invest $600 billion in the US economy, some of which will be military purchases.
US tariffs on EU steel and aluminum exports will remain at 50% while the EU agreed not to tariff the US at all. The alternative to this lopsided arrangement was for Trump to impose his threatened 30% tariffs by August 1.
The EU's macroeconomic strength was greatly weakened over the past 3.5 years as a result of the anti-Russian sanctions that it imposed in solidarity with the US on what had hitherto been its cheapest and most reliable energy supplier.
It was therefore already at a critical disadvantage in any prospective trade war. The EU's failure to reach a major trade deal with China since Trump's return to office, evident during their most recent summit late last week, made Sunday's outcome a fait accompli in hindsight.
The end result is that the EU just subordinated itself as the US's largest-ever vassal state. The US's 15% tariffs on most imports will reduce EU production and profits, thus making a recession more likely.
The bloc's commitment to purchasing more expensive US energy will become more onerous in that event. Likewise, its pledge to buy more US arms will undermine the 'ReArm Europe Plan', with the combined effect of the aforesaid concessions further ceding the EU's already reduced sovereignty to the US.
This, in turn, can embolden the US to press for better terms in its ongoing trade negotiations with other countries. On the North American front, Trump envisages reasserting the US' hegemony over Canada and Mexico via economic means, which can enable him to more easily expand 'Fortress America' southward.
If he succeeds in subordinating Brazil, then everything between it and Mexico will naturally fall in line. This series of deals, along with last week's one with Japan, would bolster Trump's hand with China and India.
He ideally hopes to replicate his Japanese and European successes with those two Asian anchors of BRICS, which together represent around a third of humanity, but it can't be taken for granted that he will.
Trump's best chance of coercing them into similarly lopsided arrangements requires him to place the US in the most advantageous geo-economic position possible during their talks; hence, the need to rapidly build 'Fortress America' through a series of trade deals, and then prove that his tariff threats aren't bluffs.
As explained in this analysis, this variable and the US's Kissingerian triangulation policy most significantly determine the future of their trade talks. If he fails, then Trump might not impose 100% tariffs on China and/or India, but some would still be expected.
Nevertheless, with Japan, the EU and likely 'Fortress America' on his side, this 'Global West' could insulate the US from some of the consequences.
The grand strategic importance of the EU subordinating itself as the US's largest-ever vassal state is therefore that it places the US on the path of restoring its unipolar hegemony via sequential trade deals as it likely sets its sights on the Americas next before finally taking on Asia.
There's no guarantee that the US will succeed, and a series of lopsided trade deals with major economies would only partially restore US-led unipolarity, but Trump's moves still represent a possibly existential threat to multipolarity.
This article was first published on Andrew Korybko's Substack and is republished with kind permission. Become an Andrew Korybko Newsletter subscriber here.