Le Club de Mediapart | 28 July 2025

EU-US agreement: An economic Munich to the benefit of the far right

By Maxime Combes, Economist, specialising in climate, trade, and investment policies

translated by bilaterals.org

The situation is appalling. Brussels has capitulated to Donald Trump’s predatory demands: the much-touted "European strategic autonomy" has just shattered, exposing both its geopolitical emptiness, the ideological refusal to reduce external dependencies, and — by extension — the weakness of Emmanuel Macron and France in Brussels.

On April 10, European Commission President Ursula von der Leyen declared her intent to "give negotiations a chance." Less than four months later, the verdict is unequivocal: the EU gave itself no chance to resist Trump’s diktat, choosing surrender over resistance, capitulation over forging an alternative path, and accepting the unacceptable rather than reducing external dependencies to build genuine strategic and political autonomy.

Here are some initial observations:

1. A predatory, brutal, and asymmetrical "agreement"

While there is no formal treaty at this stage — only a politically symbolic declaration with weak legal foundations on the European side (more below) — the terms of this "political deal" are clear:

• 15% tariffs with a few exceptions (aerospace, spirits, and pharmaceuticals), including 50% tariffs on steel and aluminum,
• Further opening of the European market to US goods (including agricultural products),
• A $600 billion investment commitment in the US,
• $750 billion in US fossil fuels purchases over the next three years,
• And the acquisition of "a significant quantity of [American] military equipment."

In exchange for what? The EU’s promise not to retaliate commercially. This is a completely one-sided deal, serving only Trump’s political interests. To justify it, von der Leyen and her allies claim it ensures "stability," avoids a "trade war," and allows EU firms to keep exporting to the US. But what "stability" is there when tariffs increase sevenfold in six months, with no guarantee Trump won’t demand more after this initial victory?

2. The price of our export dependency

To keep the US market open for European multinationals, von der Leyen has agreed — in the name of 450 million Europeans — to bankroll Trump’s economic agenda: tax cuts for the wealthy and the reshoring of US industry. If this "deal" is formalized into an international treaty and approved by European authorities — both of which are uncertain at this stage — it will be one of the greatest acts of voluntary economic extortion in history.

Contrary to popular belief, the US economy is less dependent on global markets (14% imports, 11% exports of GDP) than the EU (22% imports, 23% exports) or China (18%/20%). While the US runs a trade deficit (3% of GDP), it is less vulnerable to tariff hikes than its rivals.

Meanwhile, Europe’s export addiction comes at a steep cost: to keep LVMH and Volkswagen exporting to the US, the EU will effectively pay an exorbitant tax that will burden its own economy. The Commission and member states, obsessed with "competitiveness," missed a chance to reduce global market exposure — a short- and long-term political and economic mistake. Many firms will now have financial incentives to relocate operations directly to the US.

Domestically, pressure will mount to "boost European competitiveness to retain market share" (per France’s trade minister) — i.e., the same old recipe: suppress domestic demand and replace the welfare state with corporate welfare, showering unconditional subsidies on multinationals threatening to leave. The result? Social dismantling in sectors exposed to global competition — all so a handful of mega-corporations can keep exporting to the US.

3. A false hope: a new era, not a temporary setback

Both the Commission and many EU governments are acting as if Trump’s election were just a passing storm to wait out before ’normalcy’ returns. For months, Brussels has yielded to Trump — on digital taxes, the global minimum tax (from which US firms were exempted with EU consent), and now this. "Don’t provoke Trump," they argued, killing any chance of building leverage. A losing strategy, economically and politically.

European leaders refused to fight, letting Trump frame the debate: fixated on the US goods deficit (€198.2 billion), he ignored its €148 billion services surplus. Rather than highlight this imbalance — which undermines Europe’s technological sovereignty — von der Leyen’s statement even boasted that importing US chips would "help the US maintain its tech lead."

There will be no return to normal. The "golden age of globalisation" (when trade grew faster than output) is over. Trump, invoking "national security," is unilaterally rewriting globalisation’s rules to favour the US. The world has changed — only Brussels refuses to see it.

4. A political victory for the far right

This Trump–von der Leyen deal is a win for Trump, who strong-armed the EU into submission. By spinning it as "the best possible outcome," Brussels and European capitals (including Paris) are giving him the upper hand. Worse, it’s a victory for Europe’s far right: after dismissing the UK-US deal (10% tariffs) as bad, EU leaders must now scramble to prove theirs is better.

When all the talk of "strategic autonomy," "Europe as a power," and "reindustrialisation" collapses at the first challenge, it’s clear that neither the EU project, nor the left, will benefit. Surrendering to Trump to save a few multinationals’ market share — instead of wielding the EU’s supposed "trade bazooka" — paves the way for far-right forces to decry European weakness and hail Trump as a model. A nightmare scenario, made real by EU impotence.

5. A deal that torpedoes EU climate policy

The $750 billion in US fossil fuel purchases (justified as reducing reliance on Russian gas) means:

• Swapping one dependency for another, not cutting gas imports overall,
• Locking in billions more for LNG infrastructure,
• Handing energy policy influence to Washington (as once with Moscow),
• Betraying EU climate goals when fossil fuel use should be slashed.

6. "An extralegal agreement?"

This point is underdiscussed. The "deal" is just a verbal announcement — no text, no treaty, no legal existence. Worse, the Commission lacks a formal mandate to negotiate on behalf of the 27 member states. France (whose PM now criticizes von der Leyen) let talks proceed without legal basis. Meanwhile, 80% of Europeans (83% of French) support retaliating against the US (Eurobarometer 2025).

The terms also violate WTO rules (discriminatory tariffs, non-reciprocity). After years of preaching WTO adherence, von der Leyen flouts its laws. If WTO rules are no longer a constraint, the EU could rethink its entire trade policy — a better option than obeying Trump’s diktats.

Conclusion: What are Macron and the French Government doing?

Some days reveal the truth behind grand speeches, scattering the pieces of the political theatre puzzle. Sunday, 27 July 2025, was such a day — one that will mark the EU’s young history, exposing its global impotence and the weakness of Macron’s France in Brussels. In six months, von der Leyen pushed through the EU-Mercosur deal and this Trump agreement — both against Paris’s wishes. So what are Macron and his government doing besides tweeting?

Notes:

i. Weighted by trade volume, the average US tariff on EU imports pre-Trump was just 1.6%.