The European Union's Trade Deal with the Trump Administration: A Closer Look at the Lobster Concessions and Beyond

Strategic Insights -

The European Union's trade deal with the Trump administration has been met with fierce criticism, with some viewing it as a giveaway to Washington and devoid of victories for the 27 nations of the bloc. However, a closer examination of the deal reveals that the European Union has been strategic in its concessions, handing the United States feel-good triumphs while dodging its most painful demands. The deal's reliance on politically neutral goods like lobsters, bison meat, and energy, rather than more contentious issues like beef and chicken, has been a key factor in the negotiations.

Key Takeaways:

  • The European Union has agreed to keep tariffs on lobster imports at zero, extend a 2020 deal that had been set to expire, and allowed for the free import of the crustaceans.
  • The bloc has also pledged to buy $750 billion in American energy over three years, which is spread across three years and includes Europe's existing purchases, expected future additional purchases, and anticipated investments in things like nuclear infrastructure by American companies in Europe.
  • The European Union has agreed to invest hundreds of billions of dollars in the United States, but this is an expectation rather than a commitment of actual spending.
  • The bloc has not bent on changing its rules policing speech online, despite the Trump administration's demands, and has not altered its sanitary regulations banning hormone-raised beef or acid-washed chicken.
  • The European Union has dropped tariffs on American industrial goods and cars to zero, exposing European manufacturers to more U.S. competition.
  • The bloc has promised to drop tariffs on American pharmaceuticals, but the United States has yet to put its commitments into practice, keeping uncertainty alive.
  • The European Union has been following through on its promises, suspending a retaliation package and committing to extending the zero tariffs on lobsters past their scheduled expiration date.

Statistics:

  • 15 percent of the European Union's exports to the United States now face a 15 percent tariff, up from the low single digits before this year.
  • 70 percent of the bloc's exports to the United States face a 15 percent tariff.
  • The European Union is expected to eventually apply the 15 percent rate to cars and pharmaceuticals, which could raise concerns for automakers and drugmakers.
  • The Trump administration has warned that U.S. pharmaceuticals could be subject to levies as high as 200 percent.

Sources:

  • Tristan Spinski for The New York Times
  • Jim Huylebroek for The New York Times
  • Florian Wiegand/Getty Images
  • European Union official, speaking on Tuesday to reporters
  • Marianne LaCroix, executive director at the Maine Lobster Marketing Collaborative
  • Marc Busch, professor of international business diplomacy at Georgetown University