A month on from the announcement of a new U.S.-E.U. trade deal, which has been widely criticized as a European capitulation to Trump’s threats, we speak with Varg Folkman, a policy analyst from the Europe’s Political Economy programme at the European Policy Centre (EPC), to help make sense of the deal and its implications for Europe.

The phrase of the moment, following the announcement last month of a new trade deal between the European Union and the United States, was “humiliation.” European commentators of every political stripe, right-wingers, left-wingers, and centrists, too, all decried the deal as a terrible humiliation for the European Union and, specifically, for the European Commission president, Ursula von der Leyen, who proved before the eyes of the world her inability to resist the whims of Donald Trump—or “Daddy,” as the NATO secretary general, Mark Rutte, calls him. Von der Leyen tried her best to spin her capitulation kindly, celebrating the deal for creating “certainty in uncertain times” and delivering “stability and predictability for citizens and businesses on both sides of the Atlantic.” But nobody, really, buys that. She had been humiliated, while Daddy had gotten everything he’d wanted.

The European Union has, for no discernible gains, agreed to allow the United States to extract its wealth, almost as if it was a colony offering tribute to its imperial overlord—there is, indeed, a poetic sort of irony in Europe being on the other side of such a one-sided arrangement. While there remain many specific details to iron out, the deal, broadly speaking, sees European exporters forced to pay 15 percent tariffs on most of the goods they export into the U.S. market, while, on the other hand, American exporters won’t pay any tariffs on goods they send into the E.U. The Europeans have also agreed to invest more in the United States, with commitments to buying more American energy and weapons specifically standing out. And, to rub salt into the wound, there is no real sense that the deal will, as von der Leyen hopefully claimed, truly provide any certainty. Since when does Trump allow for that?

The specific implications of the deal are still hazy, but, to help make a bit more sense of it, we spoke to Varg Folkman, a policy analyst from the Europe’s Political Economy program at the European Policy Centre (EPC), to ask him about how bad the deal really is for Europe, how things might have played out differently, and whether or not there are, in fact, any benefits for Europe. His responses have been lightly edited for length and clarity.

We’re probably going to speak a lot about what is wrong with this deal, but, before that, can we draw out any positives?

If you were to draw something positive from it, I would say that [the global trading situation today] is a game of relative advantage. While trying to trade with the U.S., are you doing better or are you doing worse than your comparable trade partners? In that regard, the E.U. didn’t do that bad, necessarily. They got a 15 percent flat tariff, but the Most-Favored Nation (MFN) tariff is baked into it. While, for instance, the U.K. or Japan will have to trade with the flat tariff and then put the MFN tariff on top. So [the E.U.] got a concession there that most haven’t gotten. That’s a small silver lining.

But people claim that this will lead to stability and certainty. That remains to be seen. We know that Trump doesn’t necessarily stick to the deals he’s made. There’s maybe a little bit more certainty than before, but I wouldn’t say that it delivers a huge amount, either.

What alternative measures could the E.U. have taken, rather than folding to Trump’s demands, and, additionally, could you speculate as to why it didn’t do them? Is it a simple matter of European weakness?

I don’t necessarily think the E.U. is too weak. I think we underestimate ourselves sometimes. There has been analysis of how the E.U. would have done if it tried to play hardball in the same way that China did. Of course, the E.U. doesn’t have the same leverage over critical raw materials that China does, but, when it comes to input into U.S. industry, [the U.S.] relies almost as much on E.U. inputs as on Chinese inputs. So if a full-scale trade war was sparked, the E.U. could possibly cripple, or at least hold up, a lot of U.S. industry and really impose damages on U.S. industrial production. That could possibly have been pretty damaging to Trump as well. It’s only a hypothetical. We don’t really know what would have happened, but that is one possibility.

They could also have gone after the main export from the U.S. to the E.U., which is the trade in services and the big tech giants. There, they have tools they could have used. [There is] the Anti-Coercion Instrument [an E.U. regulation introduced to protect the bloc from economic coercion by non-E.U. countries], which is unproven. But they didn’t really try to use it at all.

And, they could have imposed regular tariffs. They had some in the works that never really got off the ground. The main thing here is that the member states didn’t want a trade war with the U.S. for a host of different reasons. There is the security aspect. They didn’t want to anger Trump, drive him out of NATO or out of Ukraine. Whether that is going to happen either way is an open question. But that is something that played heavily on a lot of European leaders’ minds, I imagine. It’s also a matter of Europe doing pretty poorly already. Growth is weak, if not negative. A lot of the growth engines, like Germany, are doing very poorly and have been doing poorly for a while. So there was no appetite at all for making the situation worse. And the European Commission can’t really enter into a trade war without the member states backing them to the hilt.

Might the E.U. have responded to Trump’s tariff threats, not by caving in to his demands, but by instead seeking to boost internal demand for European goods? Or, indeed, by looking to other markets?

There is a huge amount of room for increasing demand in Europe in general, and for deepening integration in the single market. But that is way easier said than done. A lot of the necessary reforms are extremely unpopular, and a lot of member states have been pushing back against them. For instance, the Capital Markets Union has been discussed for ten years, but it hasn’t really gotten anywhere. It always sparks huge protests and it’s hugely unpopular on the labor side, and among member states as well.

There are huge barriers within the internal market that are keeping growth back. It’s easy to say that oh, we could just use the internal market more. But there’s a way to go there. A lot of the key European countries, like Germany, who have been very export-heavy and export-led, have been suppressing wages at home, making it harder for Germans to buy German-produced goods, which have rather been exported. You could conceivably try to change that by raising the purchasing power of Germans to be able to buy German products, thereby lessening the impact of losing market shares in the U.S., but that entails a lot of tough domestic choices, because you would have to change your policy in ways that would increase the income of people in general. I don’t know what that would look like, but it would mean going after inequalities and doing stuff with tax systems and everything. That is not something the E.U. can do. That would have to be done by member states.

The E.U. has been trying to extend their trade networks to new countries. They have been rushing into trade deals that previously were stalling with South American countries, Southeast Asian countries, India. That is very good, and it will be a benefit in the long run. But it will definitely not fill the hole if the E.U. loses significant market shares in the U.S. The E.U. sells a lot of expensive goods. These [alternative] markets aren’t as developed as the U.S. market, which has an incredible depth. The Americans are very wealthy. So it would be wrong-headed to think that you can just exchange the U.S. market with other markets.

And, [these other countries] aren’t necessarily entering into deals with the E.U. because they want to simply buy E.U. goods. They want to sell goods to the E.U., as well. So there’s always an interaction there, and it’s not easy. There aren’t that many countries or regions that are willing to do what the U.S. has been doing for many years, of running deficits and almost completely buying goods and not selling much of it themselves.

How do you think the deal will impact living standards across the E.U.?

It’s hard to say exactly how it’s going to impact people. It depends a little bit on how these tariffs are absorbed. We saw during the first Trump presidency that most of the tariffs were just absorbed as higher consumer prices in the U.S., so who knows? There may not be a sharp downturn in trade to start with. But if there are less goods bought in the U.S., that would hit the E.U. and it would hit very trade-exposed regions, as well.

We know that there are specific regions in the E.U., most notably parts of southern Germany and north of Italy, some parts of Austria, which are very exposed to trade reductions to the U.S. That could lead to layoffs, job losses, and all of that. So it’s not going to hit the E.U. equally. It’s going to be specific regions that are harder hit than others.

In Ireland, for instance, a significant amount of its exports are pharmaceuticals to the U.S. We don’t know exactly what the situation is going to be with pharmaceutical export tariffs, because it isn’t simply a matter of the deal between the E.U. and the U.S., it’s also what happens between the U.S. and China. A lot of the parts used in E.U. pharmaceuticals sold to the U.S. are Chinese-produced. So there could be further tariffs than what has been agreed between the U.S. and the E.U., just from indirect effects of the tariffs on China. So Ireland could be hit differently. It’s going to be a regional thing.

What do you think the E.U.’s commitment to buy American liquefied natural gas (LNG) signals about the state of Europe’s green transition?

[The E.U.] is still reliant on gas, for sure. They are building out a lot of green energy, but they need gas-powered energy to be a stable backstop for when the wind isn’t blowing or when the sun isn’t shining. So, in general, I think the message from the Commission has been that this is gas we already had to buy, because we’re phasing out Russian gas—or trying to. But the estimates I’ve seen is that this is way more gas than would have been needed—I think it’s three times as much a year as what we bought previously. And we know that this is going to be expensive gas, compared to Russian gas.

But, as for its green ambitions, I’m not sure if it really says that much, because it was always on the cards that the E.U. would be highly reliant on gas for the foreseeable future. They have just been moving away from Russia and over to Norwegian producers and American producers.

When it comes to the number itself [Trump has said the E.U. will purchase $750 billion worth of U.S. energy], it’s hard to say if it is serious or not. The estimates I’ve seen from people with more expertise in this area say that this is fairly unrealistic and that the numbers are just dream logic, but we’ll have to see. Who knows if it’s going to happen at all? It’s not like the European Commission can buy this amount of gas from the U.S. It’s going to be bought by European businesses, if it’s going to be bought at all. It might have just been a number that was thrown out to please Trump. But we know that Trump, at least, is taking it seriously and has threatened a lot higher tariffs if the investments into the U.S. don’t go ahead as planned.

Trump has also boasted that the E.U. would buy “vast amounts” of American weapons as part of the deal, which comes off the back of talk in Europe that recent rises in military spending are justified on the basis of establishing European autonomy and reviving European industry. How should we assess these claims, in light of Europe’s commitment to buy more weapons and energy from the U.S.?

I don’t think there’s been a number on how much we’re supposed to buy of U.S. military goods. So we don’t know yet. There’s been much talk about how we’re going to build up the E.U. industrial base and defense industrial base. I’m not an expert in it, but, from what I’ve read, I don’t think it was realistic to think that we could build up that quickly. So I think we would always have to buy a lot of American goods. But we have to see what the final deal is.

But it really locks us into reliance on the U.S., and that is not the way to go if you want to become less reliant on the U.S. in general, especially on security goods. So it’s not necessarily a good development. But I think this is uncharted territory as of yet, because scaling down our purchases of American defense material would always be highly politically sensitive, because the American arms producers are selling a lot to the E.U. and I doubt they would have let us drop their contracts or stop buying from them in silence.

I don’t think that’s necessarily the worst part of this deal, buying more American goods. That was always on the cards, but it’s a sensitive issue.

What’s your broad assessment of the deal?

There’s been a lot of debate about what is a bad deal, what is a good deal. But if you look objectively at it, it can’t be termed as anything other than, at least, a political capitulation. Last summer, when Trump was campaigning, he was basically stating that he wanted tariffs. As we see now, he was pretty much on the mark of what he promised his supporters. The E.U. leaders were laughing at him and thinking this is nonsense, it’s never going to happen. Just months ago they stated that they would never accept any sort of baseline tariff as envisioned by Trump. Back in April, when he backed down from his Liberation Day tariffs, they were going out hard, saying, oh, this is Trump’s doing. He’s feeling the consequences of his actions. Whatever they’re saying now, it is clear that the world’s changed.

Previously they were at least selling the E.U. public on things not changing, basically that we’re going to get tariff-free trade with the U.S. Trump is just dumb, he’s going to change. So from that view, just a couple of months ago, it’s a total capitulation. They basically didn’t get anything in return. It’s just Trump dictating whatever he wanted from them.

The broader perspective here that I find worrying is that it’s really playing into Trump’s hands. Back home he’s been stating that the E.U., Japan, everybody’s been swindling, living like a parasite on the U.S. market. We could have imposed tariffs, and it wouldn’t matter much to us. So now, when he dictates to Europe that you’re going to pay 15 percent, and we say, okay, fine, that really plays into his narrative. It strengthens his hand back in the U.S. It makes it harder for these tariffs to go away in the future, because it makes it seem like this is good for the U.S.

A lot of commentators are saying, this is going to lead to higher prices for U.S. consumers and that’s going to drive down Trump’s popularity. But we know that U.S. consumers, delegates, and voters generally don’t tie economic effects and trade policy together. They are usually looking at trade as a zero-sum game, where you think about either winning or losing. And Trump has really put this in the frame of you are winning if you’re imposing higher tariffs on your trade partners than they are on you. So all of this is creating a picture of Trump as a strong man, really stamping down on the leeches in Europe and elsewhere who have been taking advantage of the U.S. Even though it may be a distorted picture, within his frame it’s really proving him right. And that is bad in the long term.

Also, as I said in the start, it’s really a game of relative advantage now over trade partners. And that is a poisoned pill, because it makes it hard to band up with other countries to form alliances against Trump. Now it’s about, how can we get a leg up on the Japanese? How can we make sure that we are doing marginally better than them, having a marginally smaller tariff to the American market? It really undermines solidarity in the system in general, and it makes it a more combative and harsh trade environment in general. So on several fronts, it’s really been a huge loss to let the U.S. have its way here.