The EU-USA Trade Deal

Implications for EU political stability and brief analysis

At a meeting at Trump’s gold resort in Scotland, in a replica of the Oval Office, Ursula von der Leyen acknowledged that 15% tariffs is the best she could do. She also agreed to commit the EU to USD250 billion of energy purchases from the USA annually, and USD500 billion in other strategic purchases, USD600 billion in investments from the private sector over four years, and increased weapons purchases. The EU will face 50% tariffs on steel, to be replaced by quotas eventually, while spirits and wines and some other sectors are unresolved. Aircraft and related items get zero for zero tariffs. The same is true for some chemicals and generic drugs. Ireland’s pharma exports are yet to be resolved.

This represents confirmation of our view that the American Empire is trying to consolidate over Europe. The EU will now be more dependent on America for energy and weapons. The energy purchase figure of USD250 billion is highly unrealistic and unattainable - according to Reuters, total current American energy exports are around USD165 billion. Buying every bit of American energy exports would still not get Europe to the USD250 billion figure.

However, this misses the political significance of the deal: by forcing the EU to accept that it must make such high purchases annually, the EU has given the USA a veto over its energy policy: every time the EU invests in wind (which Trump correctly described as a scam) or solar (another scam when built in northern Europe), the USA gets to step in and say that the EU is violating its tariff agreement, and to demand adjustments while threatening higher tariffs. The agreement as written provides the Americans with a carte blanche to intervene in European affairs.

Similarly, the weapons purchases from the USA confirm the EU’s position as a technology recipient, not producer, and place it under ever greater American control.

Commercial Implications:

• Our view is that the USA will continue trying to remake Europe into a more compliant client, at the expense of the EU. Sanctions on EU officials involved in censorship against the right, or in activities perceived as being against Israel, are likely.