BY JOHN ELLIS, FINANCIAL ADVISOR
In a dramatic meeting at Donald Trump’s Turnberry golf resort, the European Union has agreed a trade deal with the United States, the biggest deal ever struck, according to Trump. It feels, according to most commentators, less like a victory and more like a reluctant surrender by the EU.
The agreement set in place 15% tariffs on most EU imports to the US. Yes, it avoids the catastrophe of Trump’s threatened 30% levies or worse, but this is “no triumph of negotiation”. It illustrates how the EU, the world’s largest trading bloc, folded under pressure. The bloc’s agreement has left it paying a steep price. Is it not time for Europe to rethink its approach to economic bullies?
The details of the deal reveal its one-sidedness. While tariffs on aircraft, certain chemicals, and some agri-food goods are waived, the 15% hits cars, down from 25% but still a hit. Pharmaceuticals are at the same rate, protecting it from Trump’s earlier 200% threats for the moment. And the EU has committed to buying fixed amounts of US oil, nuclear power, and gas, $750bn over a three-year period, thereby subsidising American energy.
For Ireland, with its huge pharma exports, it is a mixed blessing. According to experts there is relief from escalation of tariffs but pressure on further growth. The Government needs to immediately review the upcoming Budget in the light of this agreement. Global markets remained stable with S&P futures up 0.4% and the euro currency firmed up. But the outcome of the talks exposes the EU’s fatal flaws.
From April’s ‘liberation day’ tariffs that sparked market turmoil, Brussels chose restraint over retaliation. Unlike China or Canada, which hit back hard, the EU suspended countermeasures hoping for a zero-tariff pact.
This ‘strategic patience’, urged by figures like Sabine Weyand, Director General for Trade, crumbled against Trump’s aggression. Internal divisions; Germany pushing for car offsets, Ireland protecting pharma, France calling for “more muscle,” hamstrung unity. Even the €93 billion retaliation package came too late and was watered down.
Critics are right, “the EU played by Queensberry rules in a street fight”. As a former official noted, if the EU had aligned with China’s April retaliation it probably would have forced Trump’s hand amid a disrupted market. Instead, von der Leyen’s caution, mindful of NATO dependencies and Ukraine aid, prioritised broader ties over trade leverage.
This capitulation sets a dangerous precedent. If the EU can’t stand firm against an ally, how will it fare against adversaries? The bloc must harness tools like the Anti-Coercion Instrument (ACI) earlier, adopt a member State consensus and react quickly to deter future threats.
Stability is welcome, but at what cost? Europe’s economic independence demands bolder diplomacy, or it risks being “rolled over by the Trump juggernaut” again.
As one diplomat lamented, those who don’t hang together get hanged separately. It’s a wake-up call – time to toughen up Europe.
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