Sign in Subscribe
European Union

Trump's Trade Triumph: EU's Submission to the US President's Demands

Strategic Insights

— 2 min read

Donald Trump has concluded a deal with the EU, leaving many diplomats in Europe to concede it was a victory for the US president. The agreement has been met with a mix of relief and dejection, with Francois Bayrou, the French Prime Minister, describing it as a "dark day" for Europe. The deal has effectively cast the EU into a depressive funk, with Ursula von der Leyen, the President of EU Commission, admitting that it was the best the EU could get. The negotiations followed a well-rehearsed script for the president, where he comes in with exorbitant demands and then commutes them to a mild beating, leaving the counterparty to breathe a sigh of relief.

Key Takeaways:

  • The EU has agreed to a baseline tariff of 15 per cent, more than three times greater than the current 4.8 per cent tariff, while the US has threatened a 30 per cent tariff if a deal was not concluded by August 1.
  • Trump has effectively trolled the international community, with Vietnam and Indonesia securing deals that saw them only having to pay 20 per cent and 19 per cent tariffs on their exports to the US, respectively, down from initial demands of 46 per cent and 32 per cent.
  • The deal with Indonesia includes a commitment to buy 50 Boeing jets from the US, with Trump stating, "They are going to pay 19 per cent and we are going to pay nothing."
  • The EU's negotiators performed barely better than those of Vietnam and Indonesia, with the disparate and diverse interests of the 27 member states making a strong central united position difficult to achieve.
  • Trump has exposed the EU as a paper tiger, with many believing it to be a trading bloc that vaunted its strength but was unable to deliver in the face of the US president's aggressive demands.
  • The UK's decision to leave the EU has enabled Britain to secure a better deal than the one Ursula von der Leyen secured on Sunday, with Jonathan Reynolds, as Business Secretary, admitting, "I'm absolutely clear, this is a benefit of being out of the European Union, having our independent trade policy..."

Statistics:

  • The EU has agreed to a baseline tariff of 15 per cent, up from the current 4.8 per cent tariff.
  • Vietnam will pay 20 per cent tariffs on their exports to the US, down from an initial demand of 46 per cent.
  • Indonesia will pay 19 per cent tariffs on their exports to the US, down from an initial demand of 32 per cent.
  • Indonesia has committed to buying 50 Boeing jets from the US as part of the trade deal.
  • The US has threatened a 30 per cent tariff on the EU if a deal was not concluded by August 1.

Sources:

  • [The Telegraph]
  • [The Times]
  • [BBC News]
  • [The Guardian]
  • [Financial Times]

Read more