Illustration: Xia Qing/GT
On August 7, US government’s executive order on tariffs took effect, including a demand for the EU to pay a tariff rate of 15 percent. However, the sectoral tariffs on steel, aluminum, and copper will remain unchanged, with the EU continuing to pay 50 percent. Meanwhile, under the US-EU trade framework agreement, the EU has pledged to eliminate numerous tariffs on American goods, including all tariffs on US-origin industrial products. Over the next three years, the EU will also purchase $750 billion worth of US energy products, invest an additional $600 billion in the US economy, buy large quantities of US military equipment, and commit to addressing non-tariff barriers affecting US industrial and agricultural exports.
Is such a deal a “quick victory” or a “deceptive win”? Goldman Sachs estimates the hit to the eurozone economy from the deal will be around 0.4 percentage points of GDP by the end of 2026. The German Association of the Automotive Industry says the US tariff of 15 percent will cost the German automotive industry billions annually. The EU’s promises of zero tariffs, market access, and lowered standards will severely harm agricultural interests in Southern and Eastern Europe.
This hastily concluded deal, signed just before China-US talks in Sweden, lacks final agreement on many key terms. The two sides quickly fell into a war of words over what was actually agreed. Which products are exempt from tariffs? When will the $600 billion investment be made, how will it be carried out, and where will the money come from? Even if the EU purchases all of the US’ annual crude oil and liquefied natural gas exports, that only totals about $140 billion – how will the $750 billion goal in three years be met? Does Brussels even have the authority to purchase US weapons on behalf of its member states? These unresolved questions cast serious doubt on the agreement’s feasibility.
The EU is a collective of 27 nations and one of the world’s largest single markets. However, Brussels has acted like a sluggish giant when facing unilateral tariff bullying. Under criticism, the European Commission clarified just 72 hours after the announcement that the agreement was “not legally binding” and merely a “political agreement.” However, remorse is meaningless to the US side, which has openly stated that if the EU backs out, it will face a 35 percent tariff. So far, Washington’s “maximum pressure” tactics seem to be prevailing.
In trade negotiations, the core of deterrence lies in making the opponent believe that the cost of retaliation is too high. Although the EU did draft countermeasures internally, its response never went beyond verbal warnings. This posture of “raising the gun but not firing” and “talking without action” may have led Washington to believe that the EU either has no “bullets” or simply lacks the will to use them. When an opponent sees through one’s hand, the inevitable result at the negotiating table is concession. On August 4 local time, the EU announced it would suspend two retaliatory tariff measures against the US for six months in line with the agreement – another voluntary concession that further puts itself in an even more disadvantageous position.
The uncertainty generated by the US-EU agreement, the massive economic costs, the internal divisions it has triggered, and the damage to the EU’s global political credibility have dealt a severe blow to its long-sought goal of “strategic autonomy.” It should sound another alarm about the EU’s future. Yet some political figures in Brussels still seem unaware: The core of strategic autonomy lies in the “ability to shape” rather than in “unconditional avoidance of conflict.” If it continues to delude itself and treat tariffs as mere “donations to avoid robbery,” the EU will drown in the “new era of piracy” in global trade. If avoiding angering Washington remains its top priority, the EU will remain trapped in a vicious cycle of “threats-concessions-harsher threats-greater concessions.” The “protection fee” list will only grow longer, and the imbalance of external economic and security power will worsen. Washington has already used the Ukraine issue as a bargaining chip against NATO, and now it is trying to extort the EU again – this clearly runs counter to the geopolitical security goals pursued by the EU.
How to balance transatlantic relations with its own core interests, how to safeguard its autonomy and cohesion amid fierce global competition, and how to turn “strategic autonomy” from paper to practice, from slogan to action – these are pressing challenges facing Brussels today. Brussels must realize that short-sighted compromises, scapegoating others, and sacrificing others’ interests in exchange for pity will not protect its own interests, nor will it earn international respect. They will only isolate the EU further. Political courage and decisiveness to bear short-term confrontation risks are crucial steps toward achieving genuine strategic and security autonomy for the EU.