Donald Trump strong-armed Europe into signing a trade deal, but the victory is hollow. In chasing short-term financial wins, Washington has shattered trust with its closest allies, turning cooperation into quiet resentment.
Double Asymmetry
As details of the deal show, Washington got everything it wanted from the EU. The EU’s exports to the US will be charged at 15%. Steel exports, however, will still be charged at 50%. The US exports to the EU will, however, be duty free. In addition, the White House released details of the deal show that “the EU will purchase $750 billion in US energy and make new investments of $600 billion in the United States, all by 2028”. The EU has also decided to delay its planned tariffs on the US for another six months for negotiations to flourish and yield a more balanced outcome—something that seems to have very low probability of success. The White House document calls this deal a massive step towards “liberating America from unfair trade practices … [which forced] American workers and businesses [to] tolerate unfair trade practices that have disadvantaged them for decades and contributed to our historic trade deficit”.
If, before the deal, the EU was dependent on the US for its security, this deal has subordinated the union to the US in economic and financial terms as well. In other words, this deal has only reinforced and expanded the asymmetry that has been a key feature of transatlantic ties since the Second World War.
But the EU was forced to make such a deal not only because it wanted to preserve its relations with the US, but also because it lacks alternatives. It is for this reason that it first caved to the whims of the US President with regard to increasing NATO/defence spending. The first submission made the second submission inevitable. The EU is currently in the midst of a trade war with China and a military conflict with Russia in Ukraine. Both situations, however, could have been avoided if the EU had taken a stronger position. With regard to Russia, the continent was forced into a conflict mainly because the Biden administration wanted to expand NATO to include Ukraine to permanently encircle Russia. The EU now totally depends on the US to both fight the conflict and/or reach an acceptable resolution. It is in the middle of a trade war with China because it decided to follow the US in its footsteps to “contain” China’s economic advance worldwide. The EU also used this trade war with China to keep itself aligned with the US going forward. But this strategy has not worked well enough for the EU to strike a more balanced trade deal with the US. It has only furthered its descend into irrelevance in global politics.
In fact, the EU’s commitment to purchase US energy worth US$750 billion is a direct outcome of its decision to boycott Russian gas. Since 2022, its reliance on the US energy has only increased. In other words, the military conflict in Ukraine has allowed the US to fill its coffers with European money, i.e., by selling it weapons, by forcing it to spend more defence and thus purchase US weapons systems, and by selling more and more gas. The EU, in short, is badly trapped, and the US sees itself a clear winner. This, however, may not be the case in the long run.
Reaction from the EU: Who won?
Reaction from powerful EU states, such as France, show that realization of their dependence on the US is growing fast. The French prime minister, François Bayrou, said the EU had capitulated to Donald Trump’s threats of ever-increasing tariffs, as he labelled the framework deal as a “dark day” for the EU. “It is a dark day when an alliance of free peoples, brought together to affirm their common values and to defend their common interests, resigns itself to submission”. The Spanish prime minister, Pedro Sánchez, said he gave his support for the deal “without any enthusiasm”. “This state of affairs is not satisfactory and cannot be sustained,” the French European affairs minister, Benjamin Haddad, said on X, urging the EU to activate its “anti-coercion instrument”, which would allow for non-tariff retaliation. While Germany and Italy came out in support of the deal—because it helped avoid a trade war with the US—political and economic mood in the EU is not favourable. Investor confidence in the EU is rapidly declining, showing how the deal may not pay the dividends it promised by avoiding a trade war with the US.
The reaction shows that the EU will be facing an acute internal crisis as it needs to pass legal instruments to allow the deal to work. As more and more disapprovals become public, it will become a lot harder for the EU states to come to terms with the economic effects of this deal. The reaction already shows that the wedge between the US and the EU is only going to increase going forward. This being the case, the US-EU ties stand at an inflection point. The EU may have lost to Trump’s pressure tactics and threats today, there is nothing preventing it from coming to the conclusion that the US-EU ties are changing rapidly from what they were since the Second World War and until a few years ago. If this realization continues to grow, it might become irreversible even if Donlad Trump disappears from the White House permanently. Therefore, the US may have “won” today, the deal has triggered a process that could culminate in the US “losing” its closest ally in the long run.
Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs
Follow new articles on our Telegram channel
