Trump has just triumphed over the EU

Telegraph

27-07-2025

The diplomats can take a summer break. The stock market can get back to worrying about earnings and debt. And the world's biggest companies can think about product launches and marketing campaigns instead of reorganising supply chains.
With the tariff deal today between the EU and the US the trade war is effectively over. And yet as the dust settles, one point will surely become clear. Despite all the chaos, this has turned into a triumph for President Trump – and a humiliation for a weakened EU.
The deal is very simple. The EU and the US have agreed a 15 per cent, across-the-board, tariff on European exports into the American market, while at the same time the bloc has agreed to huge new purchases from America. With the threat of 30 per cent levies looming, the EU's President Ursula von der Leyen no doubt felt that she had very little choice but to accept the terms on offer. A full-blown trade war would have dealt a crushing blow to an economy already trapped in a cycle of stagnation.
Sure, 15 per cent is better than 30 per cent. But no matter how much the euro-fanatics try to spin it, in reality Donald Trump, as he might put it himself, has knocked this one out of the park.
The deal will have huge consequences for transatlantic trade, and will raise huge revenues for Washington. The EU's exports to America are worth over €500 billion a year, and it enjoys a €198.2 billion surplus. We can expect exports to fall a little as the levies are imposed, but it will still raise billions for the American government.
It will make at least a small dent in the $1.8 trillion federal deficit, and, more plausibly, allow Trump to cut taxes elsewhere. It will encourage EU companies to massively invest in the US as the only way of remaining competitive in the world's most lucrative market.
It will also deal a huge blow to sectors such automotives, luxury goods, and pharmaceuticals, where Europe still enjoys some competitive advantages, crippling Germany's already weak economy, and worsening France's already critical budget crisis. And what did the EU get in return for all that? Absolutely nothing. It is meant to be a negotiating super-power. But it does not look that way right now.
Even more painful for the bloc will be the knowledge that Brexit Britain, which was meant to have fatally weakened itself in trade negotiations, now has a lower 10 per cent rate on most goods imported into the US. And Ireland looks set to get hammered on pharmaceutical exports, one of its largest industries, which will now face hefty levies.
Short of having to ship the Mona Lisa to Mar-a-Lago it is hard to see how it could have worked out better for President Trump. After two decades of relative economic decline, and with crushing taxes and regulation suffocating the life out of its industry, the EU is now too weak to stand up to the US. Its fragility has been painfully exposed – and this deal will only make it worse.