The EU has capitulated to Trump. But even this doesn't buy an end to the transatlantic trade war

The Guardian

5 days ago

Surrender is always one way to end a war. The capitulation of the European Commission president, Ursula von der Leyen, to Donald Trump's demands for a grossly lopsided trade deal in which most EU goods exported to the US will face far higher tariffs than US products face in the EU is not only humiliating; it also does not prevent a transatlantic trade war.
Indeed, to paraphrase the Prussian military thinker Carl von Clausewitz, it is merely the pursuit of a trade war by other means. After six months of bullying by Trump, the Europeans have acquiesced to a provisional settlement that penalises their exporters and commits the world's largest trade bloc to buying hundreds of billions of dollars of US fossil fuels and weapons for the duration of his presidency, rather than risk the blanket 30% tariffs he had threatened from 1 August.
This was far from the zero-for-zero tariff deal that the European Commission pitched at the start of the talks. The 15% across-the-board tariff von der Leyen ended up accepting was worse than the 10% rate – similar to the UK's deal – that Brussels officials thought they had secured only two weeks ago.
The deal marks Trump's second humiliation of his European partners in two months, following a Nato summit at which allies yielded to his demands that they spend 5% of their economic output on defence, with 3.5% on core military expenditure. Both were marked by undignified fawning by European officials to the US president's outsized ego, and by their unwillingness to challenge or correct even his most blatant falsehoods during excruciating joint media appearances.
The commission president declared that the deal creates 'certainty in uncertain times' and delivers stability and predictability for businesses on both sides of the world's biggest trading relationship, worth $1.7tn. Yet even that claim seems doubtful, since uncertainty remains around the status of pharmaceuticals, which she insisted were covered by the 15% tariff but Trump said would not be part of the deal.
Von der Leyen's statement that this was 'the second building block, reaffirming the transatlantic partnership' put a brave face on the fact that it was the second time Trump had wielded threats and bluster to extort protection money from timorous European countries desperate to avoid a complete US disengagement in the face of Russia's threat to the continent.
Yet aside from the disadvantages that European manufacturers now face in the EU's biggest export market, it is not clear that the deal will buy an end to transatlantic trade friction, or make Trump take a tougher stance against Vladimir Putin's war against Ukraine.
Sunday's meeting at Trump's golf course in Turnberry, Scotland, was a display of raw power. As one wag described it, the commission chief's posture should henceforth be known as 'von der Lying Down'.
The optics could hardly have been more humiliating for the representative of 450 million Europeans. Von der Leyen had to fly to Scotland and wait until the president and his son had finished their round of golf, then endure his boasts about the magnificence of the gilded Donald J Trump ballroom in which they met.
She sat in silence as Trump claimed that only the US was providing emergency food assistance to starving Palestinians in Gaza, although the EU is the one of the biggest providers of humanitarian aid. She did not challenge his narrative on Israel's months-long prevention of UN food deliveries to displaced people in the war-ravaged region.
Worse, she felt obliged to parrot Trump's narrative that EU-US trade was unbalanced and that the objective of the negotiation was to 'rebalance' the relationship, without referencing the large US surplus in services trade with Europe. Neither leader mentioned the EU's digital regulations, which remain a potential landmine in transatlantic relations that could blow up within weeks if the commission slaps fines on US tech giants judged to have breached the Digital Markets Act.
Far from bringing peace in our time, Sunday's deal leaves some crucial loose ends that have yet to be worked out, including which tariffs on agriculture the EU drops and whether alcoholic drinks are exempted from tariffs. On steel and aluminium, Trump insisted the 50% US tariff would continue to apply globally, whereas von der Leyen said the two sides would revert to historical quotas at lower tariffs.
This was at most a damage-limitation exercise to avoid a bigger immediate hit to European business. 'We should not forget where we would have been on 1 August,' the commission chief said in defence of the agreement. 'We would have been at 30% and it would have been much more difficult to get down to 15%.' The deal appears to protect the interests of German carmakers better than those of Mediterranean food and drink producers, although von der Leyen said she had made clear that some EU agricultural tariffs would stay.
What would have been the alternative? Some European officials, especially in France, say the EU should have been tougher from the outset, implementing retaliatory measures as soon as higher tariffs clicked under Trump's 'liberation day' announcement in April and invoking its anti-coercion instrument to threaten action against US services companies and investments in Europe.
Brussels was unable to make stronger use of its trade powers because of divisions among the 27 member states, with Germany, Italy and Ireland urging restraint to protect their economic interests, while France and Spain supported a more robust EU stance. The result was a deal that will undoubtedly hurt the European economy – the Axa Group chief economist Gilles Moec calculates that it could knock 0.5% off the bloc's GDP – but averted potential tit-for-tat trade measures that could have exacted a higher price.
Europe must now accelerate the conclusion of trade deals with other partners around the world to mitigate the damage from Trump's policies. At best, this humiliation could stimulate the EU to build an alliance of like-minded, rules-based trading nations and blocs without the US. But that would take more courage and more unity than the bloc has shown in handling Trump.
Paul Taylor is a senior visiting fellow at the European Policy Centre