The numbers in Trump's EU trade deal are a joke

The Hill

2 hours ago

President Trump announced a trade deal with the European Union last month, proclaiming a 'generational modernization of the transatlantic alliance' that will 'provide Americans with unprecedented levels of market access' and is 'yet another agreement that positions the United States as the world's preeminent destination for investment, innovation, and advanced manufacturing.'
The EU has been criticized heavily for folding to Trump. However, after many years of studying, practicing and teaching negotiations, I am not nearly so critical of the European strategy.
Negotiating with Trump inevitably leads to three possible tactics: ignoring, retaliating or capitulating. Everyone goes for one or more of these tactics. But most have ended up at the last one, capitulating. The U.K. (like Columbia University, and perhaps soon Harvard) was much derided when it pioneered the capitulation strategy in May. But it is not necessarily a bad strategy when confronted by Trump.
Alan Beattie of the Financial Times perceptively notes that 'Trump likes deals that aren't worth the handshake they're written on.' 'Roll with the punch,' he suggests, 'get the lowest baseline tariff you can, offer him some concessions with good optics but low impact, talk up the importance of the deal for the benefit of his ego and hope he moves on.' And so the EU has done.
The U.S.-EU trade 'agreement' is apocryphal. Others have called it delusional. It is both — and thus important to understand.
First, some context. In 2015, roughly the end of the Bretton Woods era for trade, the average weighted U.S. tariff against all goods was about 1.7 percent. Against EU goods it was 1.47 percent, versus 1.35 percent on U.S. goods into the EU. America currently imports more than $605 billion a year in goods from the EU. Trump's 'biggest deal ever made,' with a few exceptions, 'reduces' tariffs to 15 percent (steel and aluminum remain at 50 percent).
However, it is not technically a deal. It is filled with numerous ' commitments ' such as 'work to address' and 'intend to work together,' or 'intend to address' and, curiously, 'take complementary actions to address.' This is the type of language used in a preliminary phase of a framework agreement, which would be the precursor to a serious trade negotiation.
The White House is claiming that, first, that the EU will invest $600 billion directly in the U.S. during Trump's term (three times the rate it has invested in the past). This is, if not delusional, at least fantastical.
The second concrete claim by the White House is that 'the EU will double down on America as the Energy Superpower by purchasing $750 billion of U.S. energy exports through 2028.'
As Clyde Russell shows clearly in Reuters, these numbers simply do not make sense. But then, they need not. They serve their performative purpose well enough. Chalk up a specious victory and move on.
Consider that in 2024, the EU imported 573 million barrels of crude oil from the U.S., which is valued currently at about $40.1 billion. The EU imported U.S. liquified natural gas in 2024 worth about $21.78 billion and bought about $2.67 billion in U.S. coal. So EU energy imports (at $64.55 billion) are about 26 percent of the $250 billion the EU is supposed to spend on American energy each year under the framework agreement.
If the EU reaches the $250 billion a year goal, U.S. imports would account for 85 percent of its total spending on those energy commodities. While this appears to be a plus for U.S. producers, it would massively disrupt global energy markets (not to mention violate many long-term supply contracts).
But more startling, it would exceed total current U.S. exports. Putting together the value of U.S. exports for all three energy commodities totals $165.8 billion, Russell calculates, 'meaning that even if the EU bought the entire volume it would still fall well short of the $250 billion.'
Including nuclear adds a few billion dollars at best. Expanding to refined products, such as diesel? Perhaps another $10 billion.
So the EU's commitment to buy $250 billion worth of American energy is entirely unrealistic and unachievable. 'The smart people in the room must know this,' Russell writes, so 'why agree to what is obviously a ridiculous number?'
The only answer is the obvious one, and the most troubling. Substance doesn't matter, only performance.
Where businesses must operate on substance and factual reality, politicians operate increasingly on attention-gaining performance. This may explain why Trump has done so poorly in business and so well in politics (and in the businesses he is generating based on politics).
So, despite substantive criticisms of the EU team, they in fact made a perfectly understandable agreement. Specifically, when only attention matters and the substance of the deal is a mere side story of the performance, one can agree to almost anything. In this case, the more fantastical the better.
Why didn't EU Commission President Ursula von der Leyen promise $900 billion? Trump would be even happier and Europe even less likely to uphold the 'agreement.' Smile, suck-up, sign, shrug and move on. The real negotiation is somewhere down the road; perhaps tomorrow afternoon. Well, maybe. Trump's authority even to make such a deal is still being litigated.
The one unavoidable fact is that America has abandoned the rules-based trading system it carefully built over three-quarters of a century. It is a brave new world of U.S. trade 'agreements' based on rapid-fire, plainly meaningless commitments — but what a performance!
Robert A. Rogowsky is professor of trade and diplomacy at the Middlebury Institute of International Studies and adjunct professor at Georgetown University's School of Foreign Service. He is a former chief economist and director of operations at the U.S. International Trade Commission.