Yves here. Below, Andrew Korbyko describes how one sided the new “framework” trade agreement between the EU and US is. He’s not alone in this view.
Some representative Twitter takes:
What was all that talk about “European sovereignty”?
For years, Brussels told us the EU was ending dependence on foreign powers. We heard sermons about “strategic autonomy” and “open but assertive trade”.
The 2025 trade deal is not a negotiation — it’s a capitulation. A 15%… pic.twitter.com/jBx4o0vfc1
— Daniel Foubert 🇫🇷🇵🇱 (@Arrogance_0024) July 28, 2025
The EU has just agreed to what looks like the most idiotic trade deal in history with the US.
The EU pays a flat 15% tarrif and agrees to pay hundreds of billions for the privilege?
It’s a major win for the big Don, and a demonstration of the idiocy of Von Der Liars cabal pic.twitter.com/hWWTi46OKR
— Chay Bowes (@BowesChay) July 27, 2025
Pathetic. After exempting US multinationals from the global minimum tax, the EU caves in on trade
This type of extorsion never stops and rarely ends well
Our system of international economic relations needs a radical reinvention, urgently
— Gabriel Zucman (@gabriel_zucman) July 27, 2025
From Thomas Fazi in EU trade deal is a capitulation to America:
On Sunday, the European Union and the United States finalised a trade agreement imposing a 15% tariff on most EU exports to the US — a deal US President Donald Trump triumphantly hailed as “the biggest one of them all”. While the agreement averted an even harsher 30% tariff threatened by Washington, many in Europe are calling it a resounding defeat — or even an unconditional surrender — for the EU.
It’s easy to see why. The 15% tariff on EU goods entering the US is significantly higher than the 10% that Brussels had hoped to negotiate. Meanwhile, as Trump himself boasted, the EU has “opened up their countries at zero tariff” to American exports. Crucially, EU steel and aluminium will continue to face a crushing 50% tariff when sold into the US market.
This asymmetry places European producers at a severe disadvantage, raising costs for strategic industries like automotive, pharmaceuticals and advanced manufacturing — sectors that underpin the EU’s $1.97 trillion transatlantic trade relationship. The so-called “rebalancing” measures clearly tilt the playing field in favour of the US, forcing European economies to absorb higher costs simply to preserve access to American markets.
Even worse, the EU has committed to $600 billion in new US investments, $750 billion in long-term energy purchases and increased procurement of American military hardware. This further deepens Europe’s structural dependency on US energy supplies and military resources.
The political reaction in Europe has been scathing. French Minister Benjamin Haddad labelled the agreement “unbalanced”, noting that while French spirits secured a narrow exemption, the overall terms were deeply unfavourable. EU Commission President Ursula von der Leyen tried to present the deal as a pragmatic compromise to avoid an all-out trade war, but few were convinced. As geopolitical commentator Arnaud Bertrand observed on X:
In exchange for all these concessions and extraction of their wealth the EU gets… nothing. This does not even remotely resemble the type of agreements made by two equal sovereign powers. It rather looks like the type of unequal treaties that colonial powers used to impose in the 19th century — except this time, Europe is on the receiving end.
From Vzglyad via machine translation, in Marine Le Pen explains why the EU-US trade deal is a complete fiasco:
The trade deal reached by European Commission President Ursula von der Leyen with US President Donald Trump has been a political, economic and moral fiasco, said Marine Le Pen….
She explained that the deal was a political fiasco because the 27-member European Union received less favourable terms than the United Kingdom…
The deal became an economic fiasco because the commission adopted asymmetrical provisions that France, governed by a patriotic executive power, would never have accepted.
“Hundreds of billions of euros of gas, as well as weapons, will have to be imported annually from the United States. This is a capitulation to French industry, to our energy and military sovereignty,” Le Pen continued.
She saw a moral fiasco in the fact that French farmers were once again sacrificed on the altar of industry beyond the Rhine, with conditions obliging Paris to open the single market further to US agricultural products in exchange for lower taxes on German car exports.
From William Murphy in The Great Trade Swindle: How the U.S.-EU “Deal” Exposes the Rot at the Heart of Neoliberalism:
The language of these deals always obscures their true function. “Regulatory alignment” sounds technocratic, but in practice, it means harmonizing standards downward—sacrificing food safety, environmental protections, and workers’ rights on the altar of “competitiveness.” When the White House boasts of “opening markets,” what they’re really celebrating is the erosion of the last remaining barriers that slow capital’s race to the bottom. EU consumers will soon find chlorinated chicken on their supermarket shelves, while U.S. workers face renewed pressure to accept lower wages to “compete” with European precarity. The winners aren’t nations, but shareholders—the same financial elites who have spent generations pitting workers against each other across borders.
What makes this particular swindle so grotesque is its timing. At the precise moment when the climate crisis demands a radical reduction in fossil fuel production, this deal locks in decades of expanded extraction. As inequality reaches Gilded Age extremes, it further enriches the architects of that inequality. And as democratic institutions crumble under the weight of corporate capture, it hands even more power to the unelected trade tribunals where corporations sue governments for daring to regulate them. The mechanism is always the same: take a policy that would be politically toxic if presented honestly—austerity, privatization, ecological vandalism—rebrand it as “innovation” or “partnership,” and let the media chorus sing its praises.
Now to Korybko.
By Andrew Korybko, a Moscow-based American political analyst who specializes in the global systemic transition to multipolarity in the New Cold War. He has a PhD from MGIMO, which is under the umbrella of the Russian Foreign Ministry. Originally published at his website
This outcome places the US on the path of restoring its unipolar hegemony via sequential lopsided trade deals as it likely sets its sights on the Americas next before finally taking on Asia.
European Commission President Ursula von der Leyen agreed to a framework dealwith the US whereby the EU will be charged 15% tariffs on most imports, commit to purchasing $750 billion in US energy exports, and invest $600 billion into the US economy, some of which will be military purchases. US tariffs on EU steel and aluminum exports will remain at 50% while the EU agreed not to tariff the US at all. The alternative to this lopsided arrangement was for Trump to impose his threatened 30% tariffs by 1 August.
The EU’s macroeconomic strength was greatly weakened over the past 3,5 years as a result of the anti-Russian sanctions that it imposed in solidarity with the US on what had hitherto been its cheapest and most reliable energy supplier. It was therefore already at a critical disadvantage in any prospective trade war. The EU’s failure to reach a major trade deal with China since Trump’s return to office, such as during their most recent summit late last week, made Sunday’s outcome a fait accompli in hindsight.
The end result is that the EU just subordinated itself as the US’ largest-ever vassal state. The US’ 15% tariffs on most imports will reduce EU production and profits, thus making a recession more likely. The bloc’s commitment to purchasing more expensive US energy will become more onerous in that event. Likewise, its pledge to buy more US arms will undermine the “ReArm Europe Plan”, with the combined effect of the aforesaid concessions further ceding the EU’s already reduced sovereignty to the US.
This can in turn embolden the US to press for better terms in its ongoing trade negotiations with others. On the North American front, Trump envisages reasserting the US’ hegemony over Canada and Mexico via economic means, which can enable him to more easily expand “Fortress America” southward. If he succeeds in subordinating Brazil, then everything between it and Mexico will naturally fall in line. This series of deals along with last week’s one with Japan would bolster Trump’s hand with China and India.
He ideally hopes to replicate his Japanese and European successes with those two Asian anchors of BRICS, which together represent around 1/3 of humanity, but it can’t be taken for granted that he will. Trump’s best chance of coercing them into similarly lopsided arrangements requires him placing the US in the most advantageous geo-economic position possible during their talks, ergo the need to rapidly build “Fortress America” via a series of trade deals, and then proving that his tariff threats aren’t bluffs.
“The Sino-Indo Rivalry Will Shape Trump’s Anti-Russian Secondary Sanctions Decision” as explained in the preceding analysis, with this variable and the US’ Kissingerian triangulation policy most significantly determining the future of their trade talks. If he fails, then Trump might not impose 100% tariffs on China and/or India, but some would still be expected. Nevertheless, with Japan, the EU, and likely “Fortress America” on his side, this “Global West” could insulate the US from some of the consequences.
The grand strategic importance of the EU subordinating itself as the US’ largest-ever vassal state is therefore that it places the US on the path of restoring its unipolar hegemony via sequential trade deals as it likely sets its sights on the Americas next before finally taking on Asia. There’s no guarantee that the US will succeed, and a series of lopsided trade deals with major economies would only partially restore US-led unipolarity, but Trump’s moves still represent a possibly existential threat to multipolarity.
Hurting idiocy by this useless individual. I want Spanout
The USA has successfully cemented a strong alliance between between the Russian Federation and the People’s Republic of China and seems to be doing well in its drive to include Iran and even North Korea in that alliance.
I wonder if the US will be as successful in reconciling China and India?
Does Ursula imagine that Trump will not suddenly announce in a year or two’s time that he wants to revisit the deal due to “US/EU imbalances”? He has already made noises how he wants the EU to relocate their pharmaceutical industries to the US and if that does not happen, then that may be the trigger to restart new “negotiations.” Trump will come back again and again so long as he thinks that there is more on the table to take.
Darth Vader said it best:
https://www.youtube.com/watch?v=GX0oO1z9_N4
Korybko has a valid point: the EU is negotiating from a lousy position, having cut itself off from cheap Russian energy and having alienated China. It has few cards to play, and Trump can sense weakness from afar.
The danger going forward is that Trump will become overconfident and eventually overplay his hand (perhaps vs Russia or China), and then we’ll have a real mess on our hands.
Europe ruined its relation with Russia, remains incapable of establishing a proper relation with China, and is now completely subordinate to the USA.
Perhaps it is time to remind those eurocrats and their national supporters about the arguments they fed everybody in 1992, when, thanks to the Maastricht treaty, making Europe was to measure up — then against USA and Japan.
Yep but it’s simply not gonna happen.
The elite class controlling matters here is so much out of touch with what is happening on the below end of society, and so totally incompetent in certain aspects, and so much profitting off this – very much like in the 1930s – that there is just no incentive large enough to make them act differently and in accordance with what reality would demand.
It is a combination of those indulging in opportunism (like those networks that make huge profits from various raw material/fossils trades and banking schemes) and those elite networks who really think it is their duty to lead us through this “difficult time” in order to uphold progressive values.
I don’t know which group is worse. But latter are simply uninformed/miseducated in a way that it defies description (case in point Jürgen Habermas´s insane comment on Gaza).
This faith and conviction runs so immensly deep that they will do nothing short of WWIII-like self-destruction.
I suggest the war here because many rank and file types who hold together this fabric are your post-90s progressively educated kind of people who most likley opposed the 9/11 wars and are truly against war (and as such have religious faith in the Ukraine-BS. They actually believe it. And which eventually for them creates an exception from the rule when it comes to war – therefore the Hitlerisms. Which is why German elites are the worst in this toxic mixture since 2022, meaning Ukraine and Israel. So the failure is absolute. Which is why this will be a 100-year war. Until the generations now adult will have died out.)
They are genuine in their idiocy. Ideologically this is indeed a moment of singularity. It’s very hard to understand for outsiders just based on words like mine how serious it is.
One in fact needs to experience up close and personal the utter negligence and coldness of artists at a party or people in legacy news media at a cultural event and confront them with views shared around NC for instance. One need to encounter their reaction, their facial expression, their irritation that someone of their “ilk” says such a thing. It’s beyond them.
There is NO understanding. ZERO, ZILCH, NADA.
EU in this matter as toothless as with NATO vs. Kaliningrad IMO
latter briefly commented on by Mark Sleboda
TC 14:00
https://www.youtube.com/watch?v=b63mmkQPzkg
I’m afraid the situation of the US using all dirty tricks to regain dominance reminds me of a fight on the traintracks. The loser is lying with his back on the tracks while the winner is holding him down and gloating.
Totally unaware that behind him, about 200 metres away, is a train boring down at full speed, just out of the tunnel.
That train has a name, like the City Of New Orleans did. But this train is called Global Heating. And it’s whistle and brakes have failed.
It won’t be a one hundred year fight, in other words. Europeans will be lucky if they are living in caves and hunting rabbits in 100 years. And ditto Trump’s descendants
Sorry: I meant to write “they would do everything short of WWWIII”
I don’t think this is entirely true. While cutting itself from every other partner made EU obviously more dependent on USA, USA too greatly depends on EU due to trade. Except when US demands ban on ASML machines to China or Airbuses to Iran, EU meekly complies, and when Trump suddenly decides to send more nVidia AI chips to China, there is never any threat of sanctions on selling ASML machines to USA.
So EU is very much capable of crippling US alone (granted, mostly in mutually-assured-destruction manner), but thanks to captured elites it never even thinks about it.
It migh be that I’d been thinking about it all wrong, but what does Europe sell to US that’s not “replaceable”?
Imports from elsewhere, whether raw materials (like rare earths) or finished goods, just don’t seem to be prodiced in US (or, at least, not any more). Most imports from Europe seem far more easily replaceable.
I guess that depends on how one defines “easily replaceable”
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=USA-EU_-_international_trade_in_goods_statistics
On a personal level, there are no replacements for certain food/beverage items like Belgian beers, Reggiano Parmesano and other cheeses, Pata Negra hams and so on…, but that’s just my opinion. We could just buy the Kraft fake parmesan, but…
Tell that to upstate South Carolina, home to BMW’s largest assembly plant. Many of the parts are sourced locally but the engines–maybe half the value of the car–come from Europe.
https://www.nytimes.com/2025/07/28/us/politics/tariffs-eu-deal-cars.html
A 15 percent tariff on cars would “cost German automotive companies billions annually,” said Hildegard Müller, president of the German Association of the Automotive Industry. She called on negotiators to “find a solution” to resolve trade disputes between the U.S. and Canada and Mexico, where many European auto parts makers had set up to serve the U.S. market, only to see those supply chains “distorted and restricted” by the escalating trade war, Ms. Müller said.
Sigrid de Vries, director general of the European Automobile Manufacturers’ Association, said that U.S. tariffs, despite the reduction from previous levels, would “continue to have a negative impact not just for industry in the E.U. but also in the U.S.”
So Trump’s make consumers pay version of taxation will hurt car buyers and workers as his tariffs are already hurting farm exports to countries that refuse to emulate the EU’s (heavily bribed?) surrender. Michael Hudson has suggested that the real key to Euro elite behavior is that they are all on our payroll.
Just to add I believe I saw an interview with the head of BMW who said he thought they would be in a good market share position despite the tariffs because they are so integrated with the US. And re the price if you have to ask what a BMW costs then….
But making cars in general more expensive will hurt the industry and consumers and raise our insurance.
Unless of course it forces the engines to be made in the US too, further immiserating the Europeans. I’d say they could still make some tourist revenue from US auto execs now flush with cash, but Vegas has already recreated all the Euro landmarks USians are familiar with, so why bother going across the pond?
It’s really mind boggling to witness this gormless bootlicking from the Euroliberals who clearly are not fans of the Donald.
“Michael Hudson has suggested that the real key to Euro elite behavior is that they are all on our payroll.”
As a layman I´d argue yes and no: It’s a combination of corruption (Hudson´s point) and a lack of real competence – EU elites have nowhere to go for help. They never built up those networks. Instead for 30+ years EU was busting the Global South´s balls and while the structure for a BRICS slowly took shape they shit on potential allies outside the G7. Russia was only a second class member of that club. Now it turns out that the US is the worst of enemies.
And since it´s the path of least resistance for them that´s the one they choose – whether payrolled or not.
p.s. If nightmare scenarios as suggested by Scott Ritter with Nima recently like inter-European wars or serious conflicts will turn real remains to be seen. But while 3 years ago I would have laughed aways such notions I do not any more.
Almost anything is possible. Who knows what´s gonna happen in 30 or 50 years. (I am being nice with that time window.)
I mentioned ASML lithographic machines, without them any dream of cutting-edge US chip manufacturing is kaput. F-35 has a lot of parts made in EU, for example the wingbox is made in Italy. Similar for Boeing planes.
Two trillions in trade means there is a lot of leverage, moreover there is the thing that EU has surplus, which means it is sending more goods/services to US than it’s getting in return. China showed how this card can be played.
Pity Useless didn’t play it, innit?
Europe’s captured élites will be set free when the member states force elections and decide that the only place to be is outside the EU because individual, historic nations with no connection to the EU will be able to come to terms with Russia and China under less irrational new leaders might well recognise that successful countries have interests which override political fashion and economic ideology. The Russians may, of course, insist on the once-and-never-again NATO/EU “leaders” who provoked and continued to support their disastrous war against the Russian Federation be brought to account before Russian War Crimes Tribunal.
Only then will ordinary Europeans in countries free from the dictatorial stupidity of the EU institutions be able to look forward to the re-building of their economies and lives with the through trade in natural resources, goods and services with the Russian Federation and strengthen their trade ties with Russia’s partners in BRICS. Now, that would also stiff a politically unstable US for good measure. And Europe’s member countries do enjoy effective political oppositions of right and left which can bring this about once they come to power, and I am sure that the UK has and will set the example others to follow.
Maxwell Johnston and vao: I am glad that you both have commented already. I am going to use vao’s formulation: “Europe ruined its relation with Russia, remains incapable of establishing a proper relation with China, and is now completely subordinate to the USA.”
I am now going to make some points that I hope are not too fine. Keep in mind that I just returned from several days in Roma, where some of these tendencies and trends are highlighted.
–I tend to think that, at a certain point, the Italian government is going to have to cede to pressure from the populace, or Meloni won’t get that second term she wants so badly. Yes, we all know Meloni is on the cover of Time magazine this week. The “centrodestra” is all a-flutter at U.S. approval, not realizing that Time’s subscribers are down to, ohhh, 475 people. The cultural degradation and subordination are all too evident.
–Which means, though, that normal Italians will find a way to get around the deal. In the case of energy imports, U.S. gas and petroleum and such are too expensive for Italy. Italy has also cultivated fairly stable Algeria and not-so-stable Libya, among others, as sources of gas supply. The U.S. of A. is not going to bulk large as an energy source in Italy. Any idea that the Italians are going to start importing food from the US of A (other than grains like wheat or corn) is daft.
–It’s the Northern Europeans who have truly made a fottuto pasticciaccio of things, to put it politely. Yet Europe isn’t just Macron and Merz and Tusk, and their kooky English friend (whatever happened to Brexit, eh?) Starmer. The panic is coming from Northern Europe and their disastrous neoliberalism. In what universe would Ursula von der Leyen’s neoliberalism be considered a recipe for success? Oh, Brussels.
–Ignacio, above, is ready to walk out in an Españexit. That fact is that the Northies, in their infinite wisdom and plain old racism, aren’t going to enjoy the reaction from the peoples whom they didn’t deign to contact like Spain, Italy, Greece, Bulgaria, what’s left of Cyprus. You know, the Wog Bloc.
–To paraphrase Madeline “500,000 Dead Iraqi Kids Don’t Matter” Albright: There’s a special place in hell for anyone who supports a woman like von der Leyen.
–To sum up, and what hit me in the eye in Roma (because the Chocolate City doesn’t get as many tourists as Roma does): Italy has to stop importing U.S. problems. I am seeing it in the culture, in the political realignments, in the way FIAT Stellantis is managed….
Eff the North, except those in it who frequent these here parts. Never thought I would say that when I was growing up in Chitown.
Also too, every time Germany comes to dominate Europe, bad things happen. Herr Merz, Fraulein VdL and the rest of their Fritz bunch give off most unpleasant and vaguely familiar vibes which bodes ill for the continent.
In my simple mind, originated from a place very close to the geographical centre of Europe, I will always affirm that Germany not only has not paied all the debts incurred last century, it is accumulating more right now.
And if it happens with them, despite having relatives there, it couldn’t happen with nicer people…
Europe could retaliate easily but the idiots in charge who disguise themselves as tough anti Russians but are as bland as chewing gum.
“Regulatory alignment” sounds technocratic, but in practice, it means harmonizing standards downward—sacrificing food safety, environmental protections, and workers’ rights on the altar of “competitiveness.”
And it’s not only the EU and USA involved in that.
Trade deals are supposed to be ratified by individual states, so I wonder how this will go. Or perhaps Von der Leyen decided to impose her will on EU by fiat? I wonder how that would go either.
I would think the Council will rubber stamp it, but I am too repulsed to follow the details of EU politics in recent years. They break, bend, alter past EU treaty provisions anyway. The member states don’t have to have unanimity: so-called Qualified Majority Voting means this has a good chance of being passed by the member states, who are also vassal-sycophants. Collective vassals or individual vassals, all the same.
And on July 31, the Court of Appeals for the Federal Circuit hears oral argument in the Government’s appeals of their losses in the Court of International Trade in the tariff cases brought by V.O.S. and Oregon, et al. Wonder what those judges are now thinking about the stay they issued on the lower court’s injunction?
I saw blueberries labelled from Ukraine in a local supermarket (in Blighty) the other day. The EU is cutting the throats of its farmers by allowing imports from Ukraine without tariffs. And with all the money going to Ukraine both to keep its economy alive and to buy US weapons to send there at the expense of slashing social welfare and infrastructure investments, the EU is destroying the last vestiges of quality of life for its citizens. Citizens that face massive rises in heating costs and loss of jobs thanks to uncompetitive energy costs. Never can anyone have been kicked upstairs for incompetence more times than UvdL, and now there is nowhere she can be promoted higher to. All that remains is for her to continue with her wrecking ball for the next five, and probably last years of the EU. RIP EU.
I’d don’t think soft fruit from a war zone seems like a good choice to eat.
I definitely did not buy any. There are local blueberries right now, but they often come from Poland, Morocco, Peru, depending on time of year. Doubt the Polish fruit growers would be that chuffed to be outcompeted on price by Ukrainian produce in one of their main markets.
JohnA, at 1:38PM
Here on Vancouver Island, I eat an orange each day–Vit. D, you know. From California? NO! The past three weeks, from China, from South Africa, from Australia.
To me, this is a look into what is a fact of capitalist life – the cabal running the EU is the same cabal running the US and UK- they have made compacts that betray the amalgam of politics and policy that has driven late capitalism into the global ditch of austerity for us, plenty for them. Is it conspiracy? Depends on what tickles your fear buttons, or upsets your ideology. Unfortunately, we peasants do not have an organized response, no matter the label we put upon it.
Behaving as a vassal is consistent with past European policy. Are European politicians and EU officials bribed or coerced? Both? That’s the only way one could explain their behavior.
With shameless sycophants like Rutte, von der Leyen, Merz, Starmer, et al. the vassal status of Europe appears even more obvious.
As noted by others, none of this will help extend the US “hegemonic” position, but rather help to expedite the decline of the US. The Idiot Emperor and the Kakistocrat Krew is doing a helluva job. More ultimatums to Russia today. Gonna “bomb the sh*t out of Moscow”. That’s bloody brilliant eh!
The delta between Europe in its colonial heyday and Europe as a vassal plummeting into the abyss of irrelevance widens with each passing day. The beginning of Europe’s own “century of humiliation” may be at hand.
The most humiliated of all will be the workers (including Europe) all over the globe…sacrificing their rights on the “altar of competitiveness.”
One of the more deluded takes I saw today is that the deal was actually a victory, because by negotiating with VdL instead of each individual member of the EU, Trump de facto acknowledged “the sovereignty of the European Union as a community of nations.” That’s by a member of the European Parliament, which only proves that residing in Brussels apparently comes with mandatory lobotomy.
As a matter of fact the agreement contains, compromises which are well beyond vDLs competences and are meaningless. It is Trump’s style to try to force things that cannot be forced like the 5% defence spending in NATO countries. But accepting the 15% tariffs without any countermeasure is vey telling. vDL and their class probably want these tariffs being eaten by the workers and this is probably what they want: discipline further the workers.
This going to sound wild but in my opinion this will be the end of EU not as a Union but i mean the economy. We will become like USA.
Europe and Europeans must be amazingly stupid and weak to be so easily manipulated. This seems to fly in the face that Russia is seeking domination over Europe, what there is exactly is of worth? The US has acquired the territory it sought. Might as well wrap it up in Ukraine.
The apetite comes while eating. Now that they have Europe, why should the US stop at the western borders of Ukraine, or eastern borders of Ukraine. The USians always thought the sky is the limit…
It is going to be interesting to see what happens next. France appears already to be pushing back against this. The Parliament has the power to remove von der Leyen. Will they make a stand? We will see.
The is a significant portion of my being that just loves this deal–the populist part.
Ursula von der Leyen and her team of elite/bureaucratic toadies were completely outmaneuvered and outplayed. As Arnaud Bertrand lamented “this is a massive oneway transfer of wealth with no reciprocating benefits. This is Europe’s century of humiliation.”
Now let’s begin the long-haul debate and implementation of genuine populist domestic and international objectives that might just have a chance of actually benefitting the average American citizen. (Probably looking at 30 to 50 years of struggle.)
Good points.
https://warwickpowell.substack.com/p/the-great-entanglement?r=1p62fw&utm_campaign=post&utm_medium=web&triedRedirect=true
Yes, I agree that Warwick Powell puts an interesting slant on this whole situation, with the EU promising much, but which it cannot deliver. Either way, neither the EU or the US have much benefit from this. All show and no substance.
All well and good if you think that entrapment is a good thing. The Euro élites might get the cake but the European people will be eating grass. fonda Lyin’ has sold the people in the EU member states down the river and has a negotiating flair that has crossed the border to the wrong side of sanity. She may be a serious ideologue whose bones ache for the third and one half Reich, but everthing she has achieved throughout her political career places on the wrong side of sanity. If the EU has any sense it will get rid of the dross polluting the Commission and start to work out means to either reduce the EU’s reach or to break up the its formal institutions completelty otherwise Europe will either rot and die or be overthrown by nationalist insurrectionists.
I confess to being something at a loss as to see how this is a bad result for the EU. In reality, Trump backed down on all the key concerns of the EU. Specifically:
There has been no alteration to Europe’s jurisdiction to regulate the big US IT companies. This is something Google, Meta, Apple, etc., have been vigorously agitating for. There has been zero change.
There has been no change to Europe’s status as a tax haven for US Pharma and IT companies.
The EU has made no significant concessions on the regulation of agriculture products, foodstuffs or chemicals (unlike the UK).
The EU has just promised to spend hundreds of billions on fuel and armaments. But as EU officials have been briefing, the EU has absolutely no power to compel any member state or individual company to purchase what they don’t want and the EU buys neither fuel nor weapons. It seems to have made a series of vague ‘commitments’ with no legal meaning. Which is another way of saying, it won’t happen.
The EU has committed to zero tariff on US products, which effectively were almost all not subject to tariffs anyway. Most US exports to the US consist of petroleum products, pharmaceuticals, base chemicals and aviation equipment, which are either zero or low tariff products anyway. Since the US has agreed to exempt aviation products (i.e. Airbus jets), this changes nothing significant.
The 15% tariff will hit many smaller European exporters hard, especially in luxury goods and cars, but given that the Euro has risen 15% against the dollar over the past 6 months (more over a longer period), if this leads to a weakening of the euro (something they’ve been trying to engineer anyway), then this all more or less balances out. Some tariff was inevitable – given the currency differentials, this is a level the big European manufacturers can live with.
It seems to me that the EU has been content to give Trump his big headline victory, while quietly conceding nothing important whatever.
Thanks for providing these points to balance the argument. There looks to be quite a few exemptions as well.
However, in the larger context, Europe and European states are vassals of the US, and it looks even more obvious as time goes by.
I don’t see how the agreement will really help either the US or the EU in general. So you raise a good point, it’s largely for public consumption and perception and not much change to the US and EU relationship.
You are right that the headline trillions are legally unenforceable by Von der Leyen, and also there is the question who is ripping off who in unbalanced trade. However this reasoning assumes that eurocrats are actually competent and cunning. I don’t think this is the case, Leyen is explicitly defending this with nonsense like that US energy is cheaper or that EU is in the wrong when it has surplus with US. It is foolish to believe these people will in the end and by luck arrive to the correct position just because they are operating exactly like inspector Clouseau.
Layen is an idiot, but the real work was done by professional negotiators who know what they are doing (as we saw with Brexit). Brussels negotiators are an elite. They also play games with their bosses, and she is known to be unpopular with her staff, so it wouldn’t surprise me if they persuaded her to act the fool.
I believe that the main priority for Brussels was to get this over with as quickly as possible, before someone pointed out to Trump that its taxes and regulations that matter in US/EU trade, not tariffs (Brad Setzer has been trying to do this, but thankfully for Europe nobody in Washington listens to him). You don’t get to be a professional politician if you pride your dignity and integrity above winning – EU politicians are perfectly happy to play the idiots if they get what they want – what they wanted was this to be over with quickly with just a one off tariff that can be dealt with (in reality, a 15% tariff is within the normal range of currency fluctuation, so its manageable for most industries). They know Trump will never admit to being taken for a ride, so he won’t make a fuss when he realises all those extra billions of gas/military spending never actually arrives.
I very much question that they know what they are doing. For starter this is a PR fiasco. We here may know the trillions are phantasmagorical and trade is little bit more complicated than tariffs, but EU can’t argue any of this. All they have is deal where EU gives 1.5 trillion to Trump and is slapped with 15 % tariff in return. Did these professionals thought about how they are going to sell this to EU population? Judging by Von der Leyen press conference apparently not, because she was unable to present any coherent argument. As I said it will be interesting to see how this thing will be ratified by individual states.
Second, while she is an idiot, she is idiot with power. So there will not be 750 billion for US energy, but there will be push to accelerate the braindead energy policy. Even if this deal costs EU “only” couple of hundreds billions, it will still create damage. Which will create more PR disasters. I mean, every factory that closes and relocates to US is now “success” for EU, because it counts as more investment in US and lower trade surplus. Wonder how the professionals in EU will explain that.
Not sure why Trump should have problem with calling out EU about not honoring his beautiful deal. After all whining how is US badly treated is his main shtick. He will threaten 50 % tariffs and EU will be where it was yesterday, only now obligated to do things it knows can’t do.
But what if the US happens to decide to enforce them? Europe will become as it made China a century and a half ago and I can’t see Eussia or China having much sympathy.
PK — Your comment is spot-on and I fully agree, speaking rationally. But politics (like most of human life) has nothing to do with rationality (“For man is a giddy thing, and this is my conclusion”–Shakespeare, Much Ado About Nothing). Ursula’s abject and very public kissing of the Trumpian ring is a really bad look. Even if she’s playing 5-dimensional chess and out-foxing Trump (which I doubt, given her track record of failing upwards), her agreement with Trump will only serve to boost the already soaring poll numbers of the EU’s populist parties. Many mainstream EU commentators are already pushing back against her deal. For those of us who hoped to see the EU as a relatively independent and slightly more civilized counterweight to the USA, this trade deal is a political disaster. The optics could not be worse.
I start to wonder if the EU project is doomed and maybe, just maybe, the UK made the right decision back in 2016.
Its realpolitik. The EU leadership knew it was on weak ground and decided to cut its losses. Kissing the ring on occasion is just normal politics, everyone forgets about it the next day. Leyen is, in any case, just a token figurehead for the European centre right, and easily disposable. What matters to Brussels is the institution and project itself – from its perspective it has taken a small tactical loss in order to gain a longer term strategic advantage.
So you’re saying Trump wins on optics, the EU on the actual minutiae of the deal. That framing tethers the durability of that win to the vagaries of the currency markets and, do recall that for the EU’s “win” to confer any longer term strategic advantages Trump would have to stick to the deal as announced over the longer term, a very uncertain prospect indeed (he has form having already torn up Nafta and regularly doing this with other agreements). Too many media articles suggesting, as you’re doing here, that he was outfoxed by Brussels and this agreement gets annuled with a late night post on Truth Social alleging non-compliance by the EU, allegations of cheating, and a “demand to renegotiate within 50 days or else higher tariffs will be slapped on everything, no exemptions”. And, if that were to happen, VdL will rush to Washington with quivering upper lips to have new terms dictated to her. We’re in the first innings here and I’m inclined to treat this as Trump’s opening salvo rather than some masterful display of EU negotiating prowess. Time will tell I guess.
I’m not suggesting he was outfoxed by the EU. I’m suggesting that the EU took a small tactical retreat – they gave him the headlines for what he wants, while protecting their core interests – these being regulatory and tax independence, especially when it comes to US companies operating in the US, and a protective stance against looser US Regulations. There is, in reality, very little to this deal – most of it is waffle (such as the commitments to spend big on US oil and gas), so whether or not Trump holds to it is largely irrelevant to the EU as they have no intention holding up their side if they don’t have to. They don’t like the tariffs, but Germany has signalled that it can live with them, and thats what matters in Brussels.
I think the trade deal is about keeping the US in Europe by any means necessary. There has been some worry among EU politicians about the US reducing its presence in Europe and what that might lead to. This three-year deal can maybe be thought of as a payment to keep the US in Europe for the remainder of the Trump presidency, and then hope to negotiate better terms with whoever comes after Trump.
Sorry….here is direct link.
https://substack.com/home/post/p-169414086
I can’t help but put these this in the same bucket as,
BoJo torpedoing the Istanbul peace talks early on the Russian SMO
Nordstream
Ursula’s Army
Now we have this trade deal. Am I catching a scent of long term planning?
The $750 billion in energy sales to E.U. may be doable over the next 3 years, IDK what it will do to US consumer NG and electric rates.
Beyond 3 years fracking may declines, and grid demand growth due to AI bubble (unless it burst) US consumer may not carry the load. Can Qatar and UAE?
The part of the goods coming from MIC won’t help most US people.
This is similar to what has happened in Australia with gas exports, expect electricity to double in price like ours and gas shortages to develop.
The best part is the overall shape of these vague and unenforceable deals is the general framework points to the development of Cold War 2 instead of WW3. Just as the sponsoring of all these low level conflicts by the US does ( Russia/Ukraine,India/Pakistan,Cambodia/Thailand )
The economics of it all is being done by Mr Lutnick at the Bureau of Industry and Security but since it is government by cranks for cranks don’t expect it to make sense except for the under the tables deals being done. He is the most vulnerable to Epstein, owing the house next door with connecting doors.
Looks like the old tradition of “unequal treaties” keeps going unabated. Though this is of course a blow against multipolarity (it would most likely be in the Europeans’ interest to pool themselves with the rest of the world, as opposed to aligning themselves with the dying hegemon), I think dire predictions would be overstated. The EU had already been turned into a de facto US protectorate with the suicidal sanctions imposed on Russia (a war which was of course of no interest to the European Union, given that it is on their doorstep), which was demonstrated quite effectively with Nordstream being blown up without much fanfare. If anything, this is simply some honesty on vdL’s part. Why bother with pretending that they have any independence? Might as well kiss the ring and hope for the best.
I remain skeptical that any amount of treaties will regain the lost confidence in the US, but the long-term effects will most likely take a while to present themselves, given the US dollar’s paramount importance as a store of value.
Older readers may recognize the name Jean-Jacques Servan-Schreiber, also known as JJSS. Among other activities like starting L’Express magazine he also wrote Le Défi Américain, known in English as The American Challenge. Published only 58 short years ago, that serves as a bookend of sorts on a French and quasi-European reaction to post-WWII American dominance.
Will JJSS enter the lexicon as a new measurement unit, referencing a 58 year outburst of chauvinism and futility, joining more benign and whimsically pedestrian units like the Smoot?
It looks like the main purpose of the trade deal coming on the heels of the fiasco in China and the NATO-esque deal in Tokyo before that is to eliminate any viable political and economic alternative for the EU besides war with Russia. It’s time to start talking about the Nord Stream Model.
There is an opposing take here….
That is that the EU suckered the US by promising a bunch of stuff that can’t happen, won’t happen, or is already happening as part of normal trading relationships. In return, they locked the US into a long term economic commitment to Europe, which then translates as at least a partial security commitment. Warwick Powell argues this theory quite elegantly (https://warwickpowell.substack.com/p/the-great-entanglement).
I’m not truly convinced, for several reasons (some of which were discussed in your post and others in the comments). However, one major reason for my lack of belief is that the US has proven itself, time and again, to be agreement-incapable. Nothing we agree to means anything over any meaningful period of time. Deals can be made and broken and remade again at the whim of whoever occupies the White House (and whoever controls that person). In that environment, what does a “long term commitment” even mean (in either direction)?
To play devil’s advocate for a moment:
What did Trump gain? The right to tax US consumers and small businesses to the tune of 15% whenever they buy something from Europe.
What did Von der Leyen do in return? She GAVE UP the right to tax European consumers and small businesses when they buy anything from US.
Seems to me that Trump HURT US consumers and small businesses, while Von der Leyen HELPED EU consumers and small businesses.
On balance, the EU has just become a more attractive place to live and start a business, and the US has become a less attractive place to live and start a business.
Let’s play the reverse advocate.
European production for export will dwindle. Jobs will be lost. The demand is reduced in America, therefore the supply has to fall back in Europe. The unemployed go elsewhere, to American companies, maybe.
US production for export will flourish. US compradors who take in the productive forces formerly working for EU export, will flourish.
Von der Leyen helped EU consumers and the EU has become an attractive place to live in the same sense, as a burnt house might be more clean — it’s just the ash of unemployment that has to be cleared up, and that there are no useful assets to speak of whatsoever.
The EU has just made international trade impossible for itself, and therefore excluded itself from competition, and therefore, secured its long-term defeat.
The production, if moved to Cehia, Slovakia, Poland, Hungary, Romania, Bulgaria, Serbia, etc., for whatever it is will be cheaper than what Americans can produce for, and will have the benefit of getting cheap gaz (except Poland) coming vuia Turkstream, no matter how hard VdL wants to kill it.
The alleged outrage over this deal by France I consider to be so completely hot air, “Deny in public and attack now with no consequences because papers won´t ask questions later.”
reported by BERLINER ZEITUNG:
France accuses von der Leyen of “subjugation” – will the customs deal with Trump collapse?
The EU deal with the US is causing outrage in Paris: France is calling it a “black day” and warning of political and economic consequences.
https://archive.is/WpbF4
Same with Merz who publicly warns of major damage to German economy – as if he couldn’t stop VdL – this is so laughable – but worst are German media – which totally correspond with Taibbi/Kirn´s analysis of US legacy media in their uselessness and dishonesty.
What are VdL, Macron and Merz doing this WE if not playing golf together or hunt wolves. (Ok, latter only VdL who has to show M&M how to load a gun first.)
Mainly it’s a 15% Sales Tax on products from the EU. The USA can’t make them so Trump is just putting large regressive taxes on the poor in the usual Washington fashion
Rutte wasn’t lying, he really is Europe’s daddy, huh
Is it now time to bring out the guilloutines?
EU does not have that manufacturing ability any more.
Sorry, made me laugh. I’m sure young enterprising sans-culottes will find a way to expedite it, though.
If stuff is sold in the EU , end customers pay 20% VAT ( TVA etc). If EU sells stuff in US the end customer on average pay about 8% sales tax. Putting a tariff on the wholesale import cost of 15% combined with the sales tax probably ends up not a million miles away from the equivalent VAT of 20%.
So the end customer in US now will pay about the same tax as the end customer in the EU for the same EU stuff.
US customers will pay 10% more tax on Japanese goods than Japan customers as their consumption tax is only 10%.
You could argue that Japan got a worse deal than the EU. Been a vassal state for longer so I suppose it comes with the territory.
There are usually few winners in trade wars, outside infant industry protection.
US consumers will pay 15% on EU imported goods, and apparently EU consumers zilch in reverse. Can’t see that helping restore Muskrats sales in Europe by much.
Inflationary pressures increase on US consumers, and maybe retail falls a bit. EU exports may then fall, and unemployment rise, with Germany already vulnerable given recent recession , but the EU seriously needs to increase productivity generating investments anyway, and to reduce unit costs.. so who knows where that may lead ?
The US cannot replace a range of imported goods in the short run, and will have to go without or source elsewhere. But where ? China ? SE Asia ? Mexico ?
The thing with trade wars between mature economies is in the instability game, everyone loses, but its unpredictable who loses most.
TACO has been an observable phenomenon, so who knows whether the 2nd August will roll by, with the same tariffs as 31st July.
Why? think the key point is we have zero transparency, neither the public nor government. This is all about big business (corporate) interests. undermining existing standards on environmental issues, food standards, public health, public services, labour and social rights.
Zero democratic scrutiny or consent. This is all about profit first, imposing investor protections. that will include the major IT / digital players. What do you expect, they are in control. Race to the bottom