【By Yanis Varoufakis】
In 1842, defeated in humiliation, China sent its highest-ranking official, Qiu Ying, to Nanjing to meet British colonial official Sir Henry Pottinger. The cold and ruthless British negotiators laid out the terms of surrender to the Qing court. The Treaty of Nanjing that followed cost China everything but brought back only humiliation. It was called a "trade agreement," and London's merchants raised their glasses in celebration, while Chinese poets recorded this shame in their writings — the echoes of which still resonate across this vast continent today.
In July 2025, the European Commission, battered and defeated, sent its top diplomat, Ursula von der Leyen, to a Trump-owned golf course in Scotland to sign an equally humiliating agreement. They called it a "trade agreement" — merely to cover up the fact that Europe gave everything to this U.S. president, receiving only a humiliating outcome. Notably, unlike China in 1842, Europe did not submit due to military defeat, but rather endured just a few months of tariff "waterboarding" — a torment method used by Trump. Incredibly, the foolish European politicians, inspired by the unfortunate American Democrats, once contemptuously referred to it as "TACOS" (Trump Always Chicken Out).
Although European poets may not yet compose verses about the humiliation of this agreement that will loom over the European continent for decades, European politicians have already acknowledged it. French Prime Minister François Bayrou called it "a dark day." EU Brexit trade negotiator Michel Barnier lamented it as "an act of weakness" — a person who knows well how to negotiate from an extremely arrogant position should understand the bitterness of this.
The details of this EU-U.S. trade agreement are indeed embarrassing for Europe. American goods will be duty-free when exported to Europe, while European exports to the U.S. face comprehensive tariffs of 15%, with steel and aluminum exports facing a staggering 50% tariff. And this is just the beginning.
Europe has promised to cancel all cloud service taxes that it has already imposed or plans to impose on large technology companies, and to add a massive tribute to appease Donald Trump: investing $600 billion in new U.S. economic investments by 2028, and purchasing $75 billion worth of U.S. shale gas. In other words, this is a check worth $13.5 trillion — not including the hundreds of billions of dollars in military spending that European governments will have to bear (to fulfill their NATO defense spending commitments) and must purchase from the U.S.
On July 27, at Tambourine, Scotland, U.S. President Trump met with EU Commission President von der Leyen. IC Photo
When making these new commitments, von der Leyen ignored a crucial lesson that Europe should have learned from Trump's first term: refusing to pay large sums of money to him might be dangerous, but making promises that cannot be fulfilled is even worse.
First, the European Commission cannot force private enterprises to transfer funds to the United States; second, there is no correlation between the promised funds and the actual supply capacity. German automotive and chemical companies have indeed invested in the U.S. to avoid Trump's tariffs, but the investment amounts in the next two and a half years fall far short of the promised $60 billion. Worse still, the promise to purchase $75 billion worth of U.S. energy within three years (i.e., $2.5 billion annually) is pure fantasy: the annual energy expenditure of the EU is far less than this amount, let alone the fact that U.S. shale oil and gas producers lack the supply capability, even if Europe were willing to buy, the supply would be insufficient.
Doesn't Trump know this? He certainly does. Does he forget the unfulfilled promises made by Jean-Claude Juncker (the twelfth President of the European Commission, serving from 2014 to 2019, note)? No one remembers more clearly than this U.S. president. You can see it from Trump's eyes — he is enjoying the process. This is his golden opportunity to slap the EU in the face — for a long time, Trump's disdain for the EU has been growing. In addition to reducing the U.S. trade deficit and earning significant tariff revenue during this period, Trump is now waiting for the EU to violate the investment and energy procurement commitments made by von der Leyen. Once the EU defaults (expected in 2028, the last year of his presidency in the White House), he can extract more humiliating concessions under the pretext that Europeans have broken their promises.
Compared to the May-signed UK-US agreement, there is no doubt that Trump showed more leniency towards Keir Starmer. This has nothing to do with economic factors, a pro-English sentiment, or his dislike of von der Leyen. In Trump's view, there is a more important factor that makes him more friendly toward the UK, even at the expense of angering his own MAGA (Make America Great Again) base — to the disbelief of these companies, importing a completely American-parts-free British car into the U.S. is now cheaper than importing a Ford or General Motors car manufactured in Mexico or Canada (but with most parts produced in the U.S.).
Why did Trump choose to bear the pressure from his own MAGA base on behalf of British automotive companies — knowing that many of these companies are not actually British-owned? The answer is simple: by setting a uniform 10% tariff on the UK (including cars), which is 5% lower than what the EU faces, and by abolishing additional tariffs on UK steel and aluminum, he has driven such a deep wedge between London and Brussels that even the most steadfast "pro-EU" advocates now definitely lack the will to continue fighting. Therefore, Trump is delighted to see that he has made Brexit — a precursor event to his own first election victory — completely irreversible.
Before reluctantly accepting the European version of the Treaty of Nanjing, the EU leadership went through the same four painful stages as the UK Brexit negotiators: from "If the U.S. dares to pressure us, we will inevitably retaliate" to "If forced, we may retaliate," then to "We would rather not sign the agreement than accept a bad one," and finally to "Any agreement is fine, we are desperate." Now, in Brussels and European capitals, mutual accusations around this 21st-century version of the Treaty of Nanjing are in full swing, and two questions need to be answered: where exactly did the European leaders go wrong? What different approaches could they have taken to avoid this humiliating agreement and prevent greater economic harm?
The EU has committed to significantly increasing energy imports from the U.S.
First, the European negotiators made three active judgment errors:
First, they believed that the size of the EU single market was the ultimate bargaining chip. This was not the case. If there is anything that outweighs other factors, it is the scale of Europe's trade surplus with the U.S. A trade surplus exceeding $240 billion annually ensured that a full-scale trade war between the U.S. and Europe would cause much more damage to Europe than to the U.S.
Second, as my colleague Wolfgang Münchau explained, the Europeans overestimated the leverage that the EU's services deficit with the U.S. could provide to Brussels. Americans can easily live comfortably without Hermes scarves, French champagne, Kalamata olives, and Porsche sports cars; but Europeans would probably struggle to survive even an hour without Google, YouTube, Instagram, and WhatsApp.
Third, and most importantly, Europe was indulging in a delusional belief that U.S. goods and capital markets would plunge into severe turbulence, forcing Trump to back down. For a long time, they had hoped that tariffs would push U.S. consumer price inflation and stock market deflation to politically unacceptable levels. But this did not happen, and Brussels should have anticipated the reasons.
Compared to the demand of European consumers and the supply of European exporters, the demand of U.S. consumers is more sensitive to price increases (in economic terms, more "elastic"). This is why Mercedes-Benz cars made in Germany are always cheaper in New York than in Stuttgart, and why now most of the tariffs are borne by European exporters, who pass only a small portion of the tariff costs to U.S. consumers. As a result, the impact on U.S. consumer price inflation is minimal. Regarding the U.S. stock market, it seems to be immersed in an AI investment boom, the unreasonable and large-scale tax cuts given by Trump, and the buffer effect of the U.S. Treasury's annual $30 billion in tariff revenue. The U.S. stock market, immersed in this "irrational prosperity," has no intention of worrying about the macroeconomic negative effects caused by Trump's tariff policies.
But let's temporarily assume that the EU leaders foresaw all of this. There is a basic principle in negotiations: if you cannot accept the outcome of leaving the negotiation table empty-handed, then the negotiation is meaningless — better to become a beggar like von der Leyen. Given that the EU lacks the Chinese-designed negotiation weapons — rare earth minerals and various basic commodities that Americans cannot do without — what different approaches could it have taken? Here is a suggestion.
The EU's primary task should be to develop alternative measures to fill the domestic total demand gap (approximately $240 billion) that may arise from losing the trade surplus with the U.S. For example, the European Council could announce an annual production-oriented investment plan of €600 billion, financed by new bonds issued by the European Investment Bank (EIB). As long as the European Central Bank gives a hint: supporting these EIB bonds when necessary, it would be sufficient to maintain extremely low financing costs. In this way, Europe would no longer rely on the U.S. to maintain its total demand.
On August 6, the Spanish Ministry of Defense spokesperson stated that the country no longer considers purchasing U.S.-made F-35 fighters and will make choices between the Eurofighter Typhoon aircraft and the Future Combat Air System (FCAS) project jointly developed by France, Germany, and Spain.
Additionally, the EU should abolish all tariffs and sanctions against China on key green energy and digital technologies that were influenced by the U.S., and strive to reach an agreement with Beijing that includes coordinated fiscal expansion measures and mutual security guarantees. It should levy a 5% cloud service tax on all digital transactions of companies with annual revenues exceeding €5 billion, regardless of where they are registered. More importantly, the EU should abolish those harsh, anti-competitive, U.S.-imposed "anticircumvention" intellectual property laws — these laws prohibit you from using cheaper generic ink cartridges in printers; prohibit farmers from repairing John Deere tractors themselves; and prevent disabled people from making even the slightest adjustment to the steering mechanism of their electric wheelchairs. Finally, the wise move for the EU would be to gradually phase out the procurement of U.S. shale liquefied natural gas from its energy structure and to gradually replace U.S.-made weapons in its member states' armies.
Brussels never even discussed such a response plan, and this fact is enough to reveal the true nature of Europe. Donald Trump, with his demolition ball-like rudeness, exposed the truth: the EU cannot even imagine itself as a sovereign power — it is determined to continue as a vassal in the Atlanticist imperial system. Unlike China in 1842 and later, the EU voluntarily accepted permanent humiliation.
(The original article was published on the UK UnHerd comment website, titled: "This Is Europe's 'Century of Humiliation'". The translation is for readers' reference only and does not represent the views of Observer Network.)
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