EU-US Agreement: More capitulation than protection
When negotiating with the Donald Trump administration, things are rarely completely closed or clear. This is what is happening as a result of the agreement signed this Thursday between Brussels and Washington to avoid a trade war. In fact, the door to an undesirable situation such as a battle over trade barriers is not completely closed, as was often the case with pre-Trump diplomacy. A recent article in the British weekly The Economist He was talking about Trump and the Groucho Marx school of diplomacy in reference to the negotiations with Vladimir Putin over the war in Ukraine, but it could be extended to all areas, such as tariff policy.
The pact with the European Union (EU) has remained verbal and subject to all kinds of speculation, and with little satisfaction on the part of many of the leaders of the countries in this club, until it was signed. But, as the European Commissioner for Trade, Maros Sefcovic, has assured, we are not facing an immutable law or an operating framework that should not be changed for a long time. This opens the door to new negotiations and subjection to Trump's constant changes of opinion, who gives the impression of launching initiatives based on his mood and his own political interests.
Aside from important sectors such as pharmaceuticals, semiconductors, and wood, covered by the "umbrella" of a 15% tariff, other industries will continue to be subject to uncertainty, as is the case with automobiles and their components—albeit with a certain commitment to lower their tariffs to 15%. The same is true for wines and cavas, which aspired to be exempt with a zero tariff, as well as cork, airplanes and their components, and generic drugs.
Furthermore, as announced in July, Europe will be forced to purchase €700 billion in energy products from the US and €40 billion in semiconductors, and to make investments in different sectors worth €550 billion. When agreements are signed, points of equilibrium are usually reached: one party gives up some of its objectives and the other does too, because the essential objective is to reach an agreement with which both or more parties feel comfortable.
In this case, in addition to not completely ending the uncertainty for certain sectors and industries in the Old Continent, it seems that there is one winner who imposes his theses and another who accepts them, not 100% but certainly in a high percentage. Very different from the case of China, which was favored with a new extension until November. Whether due to having greater economic power or greater negotiating skills, capable of stopping Trump's proposals (often more like extortions), Beijing maintains the pulse against the US. Europe, for its part, gives an image of weakness, having a single voice but more tuned than China's, and as a result, the agreement looks more like capitulation than protection against a trade war.