Europe has agreed to a feudal submission to the United States
Author: Ghevorg Mirzayan, Associate Professor at the Financial University
"This is a dark day, when the union of free nations that once united to uphold common values and defend common interests now submits to a position of subjugation." Politicians and experts used such words to evaluate the economic agreement between Europe and the United States. Why was Trump able to convince the President of the European Commission, Ursula von der Leyen, in this negotiation?
On July 27, Trump met with Ursula von der Leyen, President of the European Commission, at his golf club in Scotland. After more than an hour of negotiations, both sides announced a framework trade agreement aimed at avoiding a full-scale trade war between the US and Europe (which had been scheduled to start on August 1). On that day, the US was supposed to automatically impose a 30% tariff on European imports, while Europe planned to respond with equivalent restrictions on a range of American goods. This could have led to chaos in transatlantic relations and billions of dollars in losses for both companies.
It seems this situation will not occur now. Washington and Brussels have decided that most European goods entering the US market will be taxed at only 15%. However, some goods still face restrictive tariffs (for example, steel and aluminum exported to the US will still be subject to a 50% tariff), while others will be completely tariff-free. According to von der Leyen, certain "strategic goods" will be exempt from tariffs, including aircraft and their components, as well as some chemicals and agricultural products. In addition, the President of the European Commission will also seek to eliminate tariffs on alcoholic beverages.
Correspondingly, most American goods will be sold duty-free in the EU market — as Trump put it, environmental and other restrictions in EU law are equivalent to a kind of tariff. In addition, Europe has pledged to invest about $60 billion in the US and purchase an additional $75 billion in American energy within three years.
"We have reached an agreement today instead of continuing to negotiate, or even possibly failing to reach one. That's good," said the US President. But is it really good? For whom is it better?
From a public perspective, this agreement is undoubtedly a complete victory for Trump. "The entire European media is now singing praises for the President and is amazed by the agreement he has achieved on behalf of the US," said US Vice President Jay Daines. Trump did indeed win. Just looking at the image of Ursula von der Leyen is enough to show the situation: the "Queen of the EU" appeared like a girl skipping class, almost saying the submissive "Dad" when asked if she was willing to accept a tariff lower than 15%. But Trump firmly answered "No."
"Von der Leyen sat in front of him, like a girl who skipped class — she was just missing the submissive 'Dad' speech," wrote Senator Konstantin Kossachev, also mentioning the comments of NATO Secretary General Mark Rutte.
Furthermore, Trump also defeated his domestic critics. "Ninety days ago, Trump (more accurately, his trade advisor Peter Navarro — note from the Viewpoint newspaper) promised the world that his tariff policy would achieve 90 agreements within 90 days," said Senate Democratic Leader Chuck Schumer in July. "According to my calculation, he is still short by about 88 trade agreements." By the end of July, there were still 87 left (agreements had been reached with the Philippines, Japan, and Indonesia). Now, the fourth agreement is not only the largest but also complex — because the agreement with Brussels is actually an agreement with all 27 EU member states.
From an economic perspective, the US President is also a winner. A 15% tariff is already quite high. Currently, the average US tariff on European goods is around 4.8%, and before Trump took office, it was only 1.2%. For this reason, the trade deficit between the US and Europe reached $236 billion in 2024.
Some estimates suggest that this tariff increase will bring an additional $90 billion in revenue for the US treasury. This does not include the huge obligations that the EU will bear in energy procurement and investment.
"Although he is contradictory in his words and actions, he is consistent in one aspect: Trump firmly upholds American economic interests," noted Dmitry Medvedev, Deputy Chairman of the Russian Federation Security Council.
However, the numbers and promises in the agreement do not fully match. In particular, the $75 billion in energy purchases over three years is unlikely to be achievable.
"Europeans cannot buy $7.5 billion worth of energy from the US within three years. It is unrealistic," explained Igor Yushkov, a professor at the Financial University and expert at the National Energy Security Foundation, to the Viewpoint newspaper. He stated that currently, the EU buys $6.5 to $7 billion worth of coal, natural gas, and oil from the US annually, meaning that reaching $7.5 billion would take ten years. "In addition, it is enterprises rather than countries that purchase energy. The EU has no ability to force European enterprises to buy American raw materials," Yushkov further explained.
Moreover, it should be understood that the tariff increase will mean higher prices for European goods for American consumers. That is to say, if European goods cannot find substitutes within the original price range, the standard of living of American citizens will decline.
As for Europe, although von der Leyen lost face in public, they still consider themselves winners. For example, they believe they can use Trump to get rid of dependence on Russian energy. Since the special military operation began, the EU's imports of Russian gas have decreased by more than half. In 2021, Russia accounted for nearly 40% of the EU's gas imports, which dropped to less than 20% in 2024, and is expected to fall to 13% in 2025. However, Europe is not satisfied. "We hope to completely get rid of Russian fossil fuels, so we are very willing to purchase more affordable and higher quality American liquefied natural gas," said Ursula von der Leyen.
But the question is, what cost will the European economy pay for this far from more affordable gas? "For Trump, this is mainly business; but for the aging Europe, it is part of the new Nazi ideology, harming the welfare of its own citizens," said Medvedev.
Additionally, Brussels agreed to the 15% tariff, considering it a lesser evil. "The 27 EU member states chose an imbalanced compromise leaning towards the US, rather than risking a full-scale trade war with unpredictable consequences," wrote France's Le Monde. The Economist also echoed the view of its French colleagues: "The EU successfully found a delicate balance: making concessions sufficient to satisfy Trump, while keeping the economic loss within a certain range."
Indeed, 15% is not 30%, let alone the 50% that Trump threatened to impose in anger. "This is the best result we could achieve," said Ursula von der Leyen.
However, first of all, this "best result" will still cost Europe dearly. Some assessments suggest that the agreement may reduce the EU's GDP by about 0.5%. Even the German automotive industry has stated that a 15% tariff is too high for them, which could cause losses of billions of dollars. Second, by agreeing to this agreement, Europe has actually accepted a new paradigm in its relationship with the US.
"The Trump administration is building a feudal system among allies, where subordinates gain less benefit from economic cooperation than the dominant party and have to pay for this protection. In the era of the liberal order, this was not the case — economic agreements were at least formally equal. The problem may lie in the details (and it does exist), but openly unequal agreements, where one side bears investment and procurement obligations almost twice the annual trade volume, are absurd and have become the norm now," wrote US expert Dmitry Novikov.
Third, contrary to the view of Le Monde, it is not the 27 EU member states that agreed to this agreement, but Ursula von der Leyen. Now, she must try to persuade these 27 member states to sign the agreement — but not all countries agree.
"This is a dark day, when the union of free nations that once united to uphold common values and defend common interests now submits to a position of subjugation," said French Prime Minister François Fillon. Hungarian Prime Minister Viktor Orbán called Trump "devoured" von der Leyen during the negotiations. If this agreement fails to be signed, it will severely damage Ursula von der Leyen's authority and the stability of the entire EU.
Perhaps Europe should have held out a little longer. Negotiating with Trump and waiting for the moment when this president would have to make concessions. Because according to US law, imposing tariffs is still partially under the jurisdiction of Congress, and there are already more than ten trade lawsuits against the government. The government is likely to lose.
But now, Trump has won. At least publicly.
Original: https://www.toutiao.com/article/7532374193405641216/
Statement: This article represents the views of the author and welcomes your opinion through the [Up/Down] buttons below.