On Friday, 01 Auust, Global stock markets tanked, leaving U.S. trading partners scrambling to curb economic volatility.
Trump's very bad trade deal with Europe
The EU-US trade deal unfortunately confirms the president´s fallacious narrative that global trade has been unbalanced and that the United States is suffering from this unfairness.
- It also cements a new trading order where tariffs are accepted as a geopolitical cudgel.
- A 15 percent tariff accepted by the European Union is definitively better than the 30 percent threatened by Trump.
- But it is still a lot more than the status of trade before Trump's second term, when the average tariff rate between the European Union and the United States was only a few percentages.
The European Union, for example, promises to purchase $750 billion worth of American oil, gas, and nuclear fuel, partly to phase out the dependence on Russia that some member states still face.
- Many experts question the realism of such a sum, however.
The European Union also commits to invest a further $600 billion in the United States, in military equipment and other areas.
- But these commitments are subject to member state competence and are up to countries and individual companies to deliver.
- The European Commission claims that these sums are more an estimation of what companies have announced already.
- This investment is non-binding and more of an intention, according to the European side, whereas the White House sees it as a promise until 2028.
- It is questionable how these investments can be measured and evaluated.
What is the direction of a free trade deal?
Ten years ago, during the administration of President Barack Obama, the European Union and the United States were negotiating a potentially very ambitious trade agreement between them, the Transatlantic Trade and Investment Partnership, TTIP.
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