European tariff capitulation

Those who wanted to believe that Donald Trump's aggressiveness could become an opportunity for European reaffirmation have already changed their minds. Faced with the frenzy of a transatlantic trade war, the EU has capitulated. With the handshake staged on Sunday in Scotland, Donald Trump scored another trade victory, heralded as always with superlatives, and Ursula von der Leyen, on behalf of the 27, accepted tariffs of 15% and an increase in the European trade bill with the United StatesPromises to buy more American oil and gas will be added to the defense contracts that are boosting US arms exports to record levels. And the current 50% US tax on steel and aluminum is still to be negotiated separately. The reorientation of European spending reflects a new reality. "It's the price of stability," justified European Trade Commissioner Maros Sefcovic on the plane from Brussels to Glasgow. The Europe with its head bowed, the one that months ago decided that this ordeal must be overcome by any means necessary, without dynamiting the already damaged transatlantic relations, seems to have taken definitive control of the reins of the community.

The arguments of Germany, Italy, and Ireland, the three countries that export the most to the United States and which wanted to limit the damage of a trade war at any price, and the geopolitical interests of the Baltic republics and Poland, convinced that the European Union is incapable of occupying the military resources that the United States has on the Old Continent, have prevailed.

The European Union has ended up accepting an asymmetric compromise in an attempt to accommodate the diverse commercial interests of its European partners: German car and chemical manufacturers, the French agricultural and wine sector, Irish pharmaceutical exporters, Dutch chip manufacturers, and Italian cheese producers. Moreover, the agreement even creates a division among the Irish, as Northern Irish merchants will be able to sell to the US with a 10% tariff rate, thanks to the agreement with the United Kingdom, while their neighbors in the Republic of Ireland will be affected by the 15% rate. So many diplomatic efforts to avoid the customs consequences of Brexit at the Irish internal border, and now this has just blown over.

Trump has set the narrative for the tariff offensive that harshly punishes European companies for not producing more in the United States, even though they represent 60% of the contributions of foreign multinationals to US GDP, three times more than companies in the Asia-Pacific region. He has ignored the real figures of a trade surplus that only represents less than 3% of total trade between the EU and the US, when trade in goods and services are combined. Furthermore, the European Commission has already shown its willingness to back down on its plans to impose a tax on digital companies, a measure that has been interpreted as an early victory for Donald Trump and US tech giants like Apple and Meta, who are engaged in an open battle against EU regulation that attempts to limit the Union's power. Ultimately, the EU had to choose between weakening "submission" to the will of an external power—as French Prime Minister François Bayrou called it—and weakening internal divisions, and it opted for the former. But what's at stake is much more than a trade negotiation. It's, once again, about the redefinition of an EU in search of strategic autonomy that will make it more independent from the vagaries of a global order in the midst of regulatory challenge. The pact with Trump is not unrelated to theAnother dialogue of the deaf that the EU had with China just a week ago in Beijing.

Defensive Europe is increasingly vulnerable. As Brookings Institute expert Daniel S. Hamilton wrote a few days ago, "because negotiations are more about spectacle than substance, deadlines and red lines can come and go." So far, Trump's United States has signed seven bilateral trade agreements since returning to power, and all of them have accepted a tariff increase. The spectacle is reproduced in every preamble of threats and the subsequent signing with smiles and thumbs-up. The lesser-evil Europe has also opted for momentary "relief," but has no guarantee that the White House will not reopen the tariff battle later, when it suits it politically.