EU vowed $600B US economy investment from Trump trade deal. Hours later, European bloc admitted it can't back that promise
The deal to avert a full-on trade war between the U.S. and one of its major trading partners came into shape over the weekend as Trump met with European Commission President Ursula von der Leyen at his Turnberry golf resort in Scotland.
Trump had threatened to impose a 30 percent tax on EU imports in a letter to von der Leyen earlier this month.
But he told reporters traveling with him on his extended-weekend golf holiday that he and von de Leyen had agreed that the U.S. would impose 'a straight-across tariff of 15 percent' for 'automobiles and everything else' imported into the U.S. from the bloc.
Trump also said the EU had agreed to open its own markets by not raising any retaliatory taxes on American goods.
Though tariffs are designed to promote domestic production and purchasing by taxing imported goods, the increase in cost typically falls on consumers, not foreign governments. This is because retailers often sidestep the increased import costs by raising prices.
Still, the president's public statements have indicated that he sincerely believes that tariffs are paid by foreign nations as a sort of tribute for the purpose of accessing American markets. In fact, they are paid by American importers and passed on to consumers in the form of higher prices.
The European Commission president called the agreement a 'huge deal' that would 'bring stability' and 'bring predictability,' calling both benefits 'very important for our businesses on both sides of the Atlantic.'
The president also claimed that the agreement would bring $600 billion into American coffers by way of investments made by the EU into U.S. companies.
But on Monday, multiple EU officials walked back the massive outlay by noting that it would be made by a variety of private companies over which the bloc has no authority when it comes to corporate spending priorities.
One such official told Politico that none of the funds touted by Trump would be from the public coffers of any EU nation.
'It is not something that the EU as a public authority can guarantee. It is something which is based on the intentions of the private companies,' the official said.
Another official stated that the $600 billion figure had been calculated "based on detailed discussions with different business associations and companies in order to see what their investment intentions are,' but as of Monday the European Commission has not announced any plans to use any sort of incentives to encourage the investment at issue.
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