Perhaps the most humiliating aspect of the EU-US trade deal is that it’s not even clear just how humiliating it actually is.
The so-called “framework agreement” – the EU’s preferred euphemism for yesterday’s Mafia-style shakedown – will likely see the average US tariff rate on EU exports increase from 13.5% to 16% on 1 August, according to Bloomberg Economics: about seven times higher than before Donald Trump’s return to the White House in January.
In exchange for America’s beneficence, the EU pledged to reduce its already-minuscule levies on numerous products, including cars, chemicals, and food. Brussels will also boost purchases of US fossil fuels and weapons by more than $250 billion per year – an almost comically high figure that will soon turn the bloc’s €50 billion net surplus with the US into a yawning deficit.
Arguably, striking a deal this bad is something of an achievement in itself: the UK, a country with an economy and population less than a fifth as large as the EU, received considerably better terms – and was mercilessly mocked by European officials for doing so.
Unfortunately for Europe, the deal – which EU chief Ursula von der Leyen preposterously claimed was “the best we could get” – will probably end up being even worse than Brussels is alleging. This is for three reasons.
First, the EU claims it has been granted a “quota system” for steel and aluminium exports, in which a limited amount is taxed below Trump’s 50% rate. (Somewhat pathetically, Brussels also says this provision is modelled on the UK’s deal.) Trump, however, has explicitly denied that the agreement covers these metals – a claim corroborated by senior US officials.
Similarly, the bloc alleges that pharmaceuticals are also included in the agreement, and in particular that pharma products will be hit by a maximum levy of 15% once Washington’s so-called ‘Section 232’ investigation is concluded in a few weeks’ time.
Once again, however, Trump yesterday flatly denied that Europe’s €120 billion worth of pharma exports are covered by the deal – a contradiction that EU officials, apparently, didn’t believe was worth clarifying before proudly announcing the "biggest trade deal ever".
(Adding to the confusion, a White House “Fact Sheet” has since claimed that steel and aluminium are not included in the deal but that pharma products will be immediately hit with a 15% levy.)
Finally, EU officials have offered virtually no details on the pledged $600 billion worth of “additional” investments in US infrastructure – which come on top of the energy and weapons purchases – over the next few years.
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