{"id":299166,"date":"2025-07-28T18:43:14","date_gmt":"2025-07-28T18:43:14","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/299166\/"},"modified":"2025-07-28T18:43:14","modified_gmt":"2025-07-28T18:43:14","slug":"europeans-lament-toothlessness-in-talks-with-us","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/299166\/","title":{"rendered":"Europeans lament toothlessness in talks with US"},"content":{"rendered":"

In the European Union\u2019s protracted trade negotiations with President Trump, a bad deal it seems is better than no deal. The terms of the Turnberry accord \u2014 which had yet to be published on Monday afternoon \u2014 establish a minimum 15 per cent tax on most European imports to the United States and commit the bloc to buying hundreds of billions of dollars of America\u2019s oil and gas and investing in the world\u2019s largest economy. <\/p>\n

The contours of the deal mirror the agreement struck between the US and Japan last week and mean Friday\u2019s \u201cdeadline\u201d for the expiry of a tariffs reprieve will not be much of a cliff edge for the global trading system. Trump has also struck tariff agreements with the UK, Vietnam, Indonesia and the Philippines, and talks with Beijing over a planned 40 per cent levy start in Sweden this week. Uncertainty continues to hang over Mexico and Canada \u2014 the US\u2019s two largest trading partners who are still subject to some of his most punishing protectionist measures and a 25 per cent minimum tariff. <\/p>\n

The US-EU truce in Scotland at the weekend concludes months of fractious talks in which Brussels unsuccessfully tried to bring Trump back to the 10 per cent baseline tariff that the UK will be subject to. The two sides have still landed below a threatened 30 per cent tax that would have stung export industries such as cars and pharmaceuticals. Monday\u2019s \u201crisk on\u201d stock market rally is mostly relief that the 15 per cent isn\u2019t as high as it could have been. For now, in a win for Germany, Europe\u2019s car exports will be subject to the 15 per cent tariff, not the proposed 27.5 per cent, but steel and aluminium levies will remain at 50 per cent. The fate of the pharmaceuticals trade<\/a> is still up in the air as Trump retains the power to increase levies when a planned report on the state of the sector is released in the coming days or weeks. The Europeans are not off the hook. <\/p>\n

\u2022 Trump\u2019s tariffs are still too high, EU businesses warn<\/b><\/a><\/p>\n

Investors have taken far more comfort in the agreement than its signatories on the Continent. France\u2019s prime minister dubbed it a \u201csubmission\u201d; Olivier Blanchard, a former official at the International Monetary Fund, called it a \u201cdefeat\u201d; Viktor Orban, the Hungarian prime minister, has used it to claim that the European Commission was \u201ceaten for breakfast\u201d by his American ally. Orban copycats like the Alternative for Germany party called it a \u201cslap in the face\u201d. <\/p>\n

The effective US tariff rate applied on eurozone goods will rise from an average of 2 per cent before Trump\u2019s return to the White House to about 16 per cent. Economists are now rapidly revising up their forecasts for the GDP hit to the EU, which had been assumed to be about 0.1 to 0.3 per cent this year, to upwards of 0.5 per cent. The economic impact will be asymmetric. The likes of Ireland and Germany are in the line of fire.<\/p>\n

\"Donald<\/p>\n

President Trump and Ursula von der Leyen announce their trade deal at Trump Turnberry golf club on Sunday<\/p>\n

As this column argued a couple of weeks ago<\/a>, a combination of the Europeans\u2019 technocratic strategising, a divided bunch of member states, and reticence to use China or any of Trump\u2019s other economic battering rams to put collective pressure on the US, meant that an outcome close to the one agreed had seemed inevitable. Brussels has since admitted that its negotiating leverage was massively hindered by the fact that the talks were \u201cnot just about trade\u201d, according to its chief negotiator, Maros Sefcovic. The White House weaponised its security guarantees and Ukraine as part of the talks, the trade commissioner said on Monday. <\/p>\n

The Europeans are rightly lamenting their chosen toothlessness. After the capitulation, EU diplomats have conceded that pre-emptively removing the threat of tariffs retaliation<\/a> and foreclosing the use of Brussels\u2019 anti-coercion instrument \u2014 which was set up after Trump\u2019s 2018 tariffs assault \u2014 weakened the bloc\u2019s negotiating position and did nothing to appease Trump.<\/p>\n

The decision to play nice \u2014 by removing US tech firms from a global minimum taxation agreement or continually pushing back planned tit-for-tat tariffs \u2014 was also based on a reasonable but still unfulfilled claim that the US will be the biggest loser from Trump\u2019s trade barrage. There has been a near universal agreement in the economics profession that tariffs will raise inflation for American consumers and hurt the economy through delayed investment, job losses and supply chain disruption. This is still the most likely outcome but the last few months have shown that the tariff \u201chit\u201d that the Europeans and financial markets were banking on to make Trump \u201cchicken out\u201d has not yet materialised. <\/p>\n

The surprising absence of tariff-induced inflation or any discernible drop-off in economic growth in data releases since April has emboldened Trump in his assault against his trading counterparts and the US Federal Reserve. It has scuppered the Europeans and the Japanese in their negotiations and means stock markets now rally at the prospect of the highest effective US tariff rate in a century. Even the bond market \u2014 the constituency that forced Trump back from the brink of his \u201creciprocal\u201d tariff assault in April \u2014 is now unmoved by explicit threats to fire the Fed\u2019s Jerome Powell and has happily swallowed a basic tariff rate that is higher than the 10 per cent announced in April. If this is Trump chickening out, the Europeans won\u2019t want to see the president when he really means it. <\/p>\n

In Brussels, hand-wringing over the contradictions and contortions of the EU deal has just started. Last summer the Commission held up the Draghi report<\/a> as its manifesto for the next five years to narrow the economic gap with a mighty US through regulatory nimbleness, massive public funding for industries of the future, and the beginning of a strategic and military break with the old hegemon. Over the last few weeks, the EU has instead thrown its regulatory autonomy by the wayside, promised to purchase fanciful amounts of US energy, and said its newfound defence spending prowess will be mainly about buying more American weapons.<\/p>\n","protected":false},"excerpt":{"rendered":"In the European Union\u2019s protracted trade negotiations with President Trump, a bad deal it seems is better than…\n","protected":false},"author":2,"featured_media":299167,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5311],"tags":[49,978,659],"class_list":{"0":"post-299166","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-states","8":"tag-united-states","9":"tag-us","10":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114932338120027396","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/299166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=299166"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/299166\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/299167"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=299166"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=299166"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=299166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}