There is in fact no agreement or legally binding commitment on either side: Trump is unilaterally announcing a level of customs duties and UvdL is making vague promises.
And now I'm going to let an expert in these matters speak Sir Aslak Bleg
" Most EU goods will now face a 15% tariff, with some exemptions like aerospace, semiconductor manufacturing equipment. This is a flat, comprehensive rate, meaning that it replaces all existing tariffs. This rate is high enough to inflict some pain, but overall it's manageable for a couple of reasons: First, it's not just the absolute level of tariffs, but also the relative level that counts. 15 percent is the same as Japan, slightly more than the UK, but crucially much lower than China and the rest of the world. In relative terms, the EU is in a good position. Moreover, US domestic manufacturing has little capacity to replace EU exports. And if they did, they face disadvantages: E. g.: US auto producers have to pay 25% for parts from Mexico and Canada, and face higher steel and aluminium prices due to 50% tariffs. They'll be at a disadvantage. The investment climate in the US is now, for perhaps the first time in history, more uncertain than in Europe. You can invest in domestic manufacturing, but who knows what US policy will be 5 years from now? Tough to make billion-dollar investments in that environment. As for the commitments on investment, energy and weapons purchases they'll have little effect (and the EU has little power to direct these things in any case). 600 billion of investment represent 4-5 years of EU FDI in the US, not hard to reach over Trump's term. ... "
Personally, if this agreement were to remain as it is, it would be an imbalance for Europeans. And politically very bad. But on the other hand, the only positive point is that it would increase US dependence on the European market.
I dont see that in all honesty. I have not seen the actual trade deal so far, only what Trump has said and what his administration has corrected him on afterwards when he overstated aspects.
First of all, the best deal was the one that the EU and USA already had. Obviously. It is the product of much better negotiators working over decades.
But what is USA actually getting from this? First is the energy deal which is something that the EU would buy anyways since they need to replace the energy they used to get from Russia. It is also a temporary solution since the EU is looking to replace gas and such with other energy sources like nuclear and green energy. Second is exports of US military equipment which is nice but would probably also happen regardless as the EU militarizes due to the Russia-Ukraine war.
Then there is also the question of the 600 billion investment but I dont know where its going or if its something that is going to benefit USA or both.
In the end, this is not an actual trade deal, its just a few scattered agreements meant to avoid an actual trade war and I at least have not even seen the details of it yet. Optically it has allowed Trump to run a victory lap (which I disagree with since the best deal was the one that already existed) but depending on the details this could be a completely different case.
At some point, Europe offered Trump zero reciprocal tariffs. Trump refused. It's a shame because it would have created a sort of colossal march between the US and Europe.
Now the EU will probably pivot away from USA. They got burned too many times so to speak. The actual transition will take years if not decades but I can't imagine they would so openly cooperate or depend on the USA in the future.
First the most important thing to remember is that we do not have a deal. We have a small retelling from one side of details they wanted to share. As Trump needs to share some positive news, allowing it to be in his favour is likely part of any actual deal. But main point, there is no deal yet.
Second, most of this mimics the deal with Japan. Which is already in hot water. In that deal Japan got a Way Better deal than the US. Essentially getting part of US tariff income in perpetuity in exchange for a relatively small loan, framed as an investment. The EU deal has the exact same setup so far.
Third and basically just repeating things. There is no deal yet. There is a framework. The framework mimics the US-Japan one which heavily favoured Japan. Since the announcement of the framework the Euro has strengthened and the Dollar has not. Trump very much need a win and a distraction from the Epstein files he is in, this is a good one. Allowing him to announce a positively framed framework creates goodwill for any actual deal being made.
Also, the deal as is will basically cause very minor inflationary pressure in EU and some inflation in the US. It really is like we are doing economy while ignoring the last 100 years of research.
US citizen will pay even more for EU cars and stuff. If it's beneficial for normal John Doe? I doubt. VW or Mercedes will shrink a bit but they business model is anyway outdated and their product too expensive. EU's auto industry will suffer probably much more due Chinese competition than 15% of US tariffs. A dentist of surgery MD will buy furthermore brand new Mercedes, Porsche and BMW, independently if they cost 15k more, they have the money. A cashier from Wallmart can't afford a 100k car anyway
All EU countries have to agree to sign a trade agreement. The French are certainly not on board, Italy isn't too thrilled either, and the rest are keeping quiet for now. The investment nonsense is the same numbers it's been for the past administration. What's REALLY stupid is that it's not a straight up "no tariff" deal. You know why? Because the EU doesn't need as much from the USA, except energy, as the USA needs from the rest of the world, including the EU. Trump's idea of "leverage" is to tariff anyone who does business with anyone who objects to his tariffs.
The PATHETIC thing is that idiots sit here in this country and APPLAUD the idea that the public is going to pay more for items it needs, or wants, that the US doesn't even produce at affordable prices! One more time people:
YOU/WE ultimately pay for the tariffs - not the importers, because they pass it on to us. Not the exporters, not the governments of the exporters. When the HELL are you going to wake up and understand this?
interesting analysis. yes, uncertainty... especially politically... what happens in 3 years? Unless it's inked into long term, I'd think most businesses drag their feet.
Trump is famous for buliding things and going bankrupt, but remaining rich. that's reality. he's trying to repair US finances for a little longer, but it's a disaster. We were the teat of the world for too long, wasting $ and were in trouble.
I cannot imagine Audi owners trading in theirs for a Cadillac or Chevy. People will pay more... most americans that buy these vehicles don't care. when it comes to cheese, I'll have a difficult choice to make to consume the flavorless plastic garbage Wisconsin produces or buy Irish/English/Italian cheese at much higher prices.
We, or is it oui, are on the train, just left Bordeaux heading to Nantes, then up to Caen probably as I'd like to see Normandy again. We enjoyed Bordeaux. Climbed 3 flights of tiny spiral staircase to get to our flat.
Any recommendations to do or see in Normandy? I enjoy WWII history. AS well, was just reading up on my Norman history and drama. My my, Herleva sounded like quite a woman! rides into the castle all dressed up rather than go into the back door. That's a strong woman.
Similar to the Japan agreement to make an agreement, the investment by European companies is actually no monitory investment at all. It is loans guaranteed by US taxpayers and no money out of pocket for Japanese or European companies to build a plant. Japan released a statement that they only expect Japanese companies to pay between 1-2% of the $550B "investment" in the US. If they default, the US taxpayer is on the hook. The US government will get a piece of the profits, so its a no brainer for companies to build factories because there's no risk. It's hardly a conservative position to be partners with foreign companies to build plants and siphon off some profits but I guess if China can do it. But for big American manufacturers like automakers, this is a horrendous deal to have your government partnered with foreign competition.
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