EU defends Trump trade deal facing backlash
"I'm 100% sure that this deal is better than a trade war with the United States," top EU trade negotiator Maros Sefcovic told journalists.
European Commission President Ursula von der Leyen clinched the framework accord with Trump Sunday after dashing to Scotland as the Aug 1 deadline loomed for steep levies that threatened to cripple Europe's economy.
EU exports are now set to face across-the-board tariffs of 15% -- higher than customs duties before Trump returned to the White House, but much lower than his threatened 30%.
The 27-nation bloc also promised its companies would purchase energy worth $750 billion from the United States and make $600 billion in additional investments -- although it was not clear how binding those pledges would be.
"This is clearly the best deal we could get under very difficult circumstances," Sefcovic said.
Full details of the agreement -- and crucially which sectors could escape the 15% levy -- will be known in coming days, although the EU says it has avoided steeper tariffs on key exports including cars and medicines.
But the reaction from European capitals -- which gave von der Leyen the mandate to negotiate -- ranged from muted to outright hostile.
French Prime Minister Francois Bayrou said it was a "dark day" for Europe and said the accord was tantamount to "submission".
Speaking for Europe's biggest economy, German Chancellor Friedrich Merz gave a warmer welcome to a deal he said had avoided "needless escalation".
Industry groups in both countries made plain their disappointment however, with Germany's main auto sector body saying the 15% levy "burdens" carmakers while its VCI chemical trade association said the rates were "too high".
Hungary's Prime Minister Viktor Orban attacked the deal in blunt terms, saying "Trump ate Ursula von der Leyen for breakfast".
'Not only about trade'
"It looks a bit like a capitulation," said Alberto Rizzi of the European Council on Foreign Relations (ECFR).
"The EU accepted a fairly unbalanced deal," he added, saying it delivered a "political victory for Trump".
Von der Leyen had faced intense pressure from EU states to strike a deal quickly with the bloc's biggest partner and protect a $1.9-trillion trading relationship.
Defending Brussels' approach, Sefcovic warned that a no-deal scenario -- meaning a 30-percent tariff and the prospect of further escalation -- would have risked up to 5 million jobs in Europe.
Throughout the months-long talks, Brussels prioritised stability and maintaining good relations with Washington, over escalation.
That line of thinking has support: Italian Prime Minister Giorgia Meloni, a Trump ally, said the deal had avoided "potentially devastating" consequences.
Markets in Asia and Europe welcomed the certainty and rose following the announcement -- reflecting the 4.4 billion euros ($5.1 billion) worth of daily transatlantic goods and services trade that were at stake.
Hanging over the negotiations was the risk to other areas of cooperation -- like Ukraine -- if the EU descended into a trade war with its closest security partner.
"It's not only about the trade -- it's about security, it's about Ukraine," Sefcovic told reporters Monday.
Jacob Funk Kirkegaard of the Peterson Institute for International Economics acknowledged it was "clearly an imbalanced deal" if judged purely on trade terms.
"But if you're trying to avoid worse national security outcomes, well then maybe the deal is not so bad," he said.
Cautious approach
The EU had sought to ramp up the pressure in the final stretch of talks, fearing a bad deal and higher levies, with countries approving a $109-billion package of counter-tariffs at the last minute.
And states led by France were pushing for a more robust response including the option to deploy the trade "bazooka" known as the anti-coercion instrument.
But the threat of retaliation was consistently framed by Brussels as a last resort should talks fail, and experts suggested the hardening stance may have come too late to make a real difference.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bangkok Post
8 hours ago
- Bangkok Post
Thailand does well to secure 19% US tariff, says Prommin
Thailand has headed off a major trade conflict after securing a fair 19% US tariff rate with the deal now headed to parliament for approval, said Prommin Lertsuridej, secretary-general to the prime minister. He said on Monday the country has successfully navigated the global trade war sparked by the Trump-era tariff regime, securing a 19% import tax rate on Thai goods entering the US — a level he described as comparable to regional peers and more favourable than some competitors. 'This was a global crisis, not one faced by Thailand alone,' Dr Prommin said. 'But we've now reached a resolution that offers significant advantages for our business sector going forward.' He added that the crisis phase is over, but the government's responsibilities continue. 'We now have a clear answer, and that clarity enables us to expand trade and market access.' Thai goods bound for the United States will be subject to a 19% tax, starting on Thursday. The rate, markedly lower than the 36% initially set by the US, was announced after the government agreed to eliminate import duties on over 10,000 items imported from the US. Dr Prommin noted that the 19% rate puts Thailand on a level playing field with regional exporters. 'We're no longer at a disadvantage. In fact, we might even have a slight edge over some countries. We're now in a fair position to compete in the same markets.' Looking ahead, the government will shift focus to economic restructuring, as outlined by Deputy Prime Minister and Finance Minister Pichai Chunhavajira. On the legal side, Dr Prommin confirmed that once the agreement has passed a special cabinet session and a consensus on the negotiation framework has been reached, it will be submitted to parliament for approval. 'There is a legal process that must be followed. Once we are at that stage, everything will proceed transparently and in line with the law,' he said.
Bangkok Post
21 hours ago
- Bangkok Post
Trump hurting global trade in ideas
Much attention has been focused on Thailand's scramble to achieve a bilateral trade agreement with the United States to avoid a 36% tariff on all exported goods. Yet a different restrictive trade policy has received comparatively less scrutiny -- the Trump administration's clampdown on American universities, including a possible ban on the enrolment of international students. While it is typical to view shipments of rice or semi-conductors as exports, it is less common to discuss the free flow of ideas in and around US universities as a function of trade and as a uniquely American export. Immeasurable benefits flow to the US and countries around the world from the participation of international students on American campuses. Now this trade in ideas is jeopardised by threatened Trump administration plans to wall off scholarship and scientific inquiry much in the same way it has tried, and failed, to wall off the southern border of the United States. President Trump began this attack on higher education soon after his inauguration earlier this year by freezing grants to universities from the National Science Foundation, quickly followed by freezing other research funds. Several university presidents were called to testify in contentious hearings on Capitol Hill in relation to their use of Diversity Equity and Inclusion (DEI) policies, one of the most salient targets of the Trump Administration. These policies have increased the enrolment of first-generation college students and students of colour but have also been indirectly associated with political expression that the administration finds objectionable, including support for a free Gaza and opposition to US support for Israel. Although the Trump administration has launched investigations into DEI efforts at 52 universities, much of its retaliation has centred on Harvard University. When the university refused to turn over the records of international students involved in political protests, the school's tax-exempt status was cancelled, and an executive order was issued denying the school the ability to enrol international students. Harvard has sued the White House claiming that its efforts to block the school from enroling international students are unconstitutional. Other schools remain fearful of the lengths the administration may go to bring US universities to heel and the chilling effect this will have on discourse and the exploration of ideas on campus. Indeed, Columbia University recently reached a settlement with the administration and agreed to pay US$200 million (6.5 billion baht) in fines to have its $400 million in grants unfrozen. The president of the American Association of Colleges and Universities has called this agreement "government overreach into institutional autonomy and academic freedom". Harvard has the largest endowment of any university in the world, so it can temporarily weather a loss of federal funds without acquiescing to Mr Trump's demands, but the situation is not sustainable. The university has entered discussions with the White House to reach a negotiated truce, which may yet include restrictions on its ability to enrol international students at current levels. In full disclosure, I am a graduate of the Harvard Kennedy School, the school within the university with the highest enrolment of international students at a little over 50%. When I studied there, the classes were enriched by the participation of international students, some of whom were from Southeast Asia. A future Thammasat rector, a future Minister of the Environment from the Philippines and a future Deputy Prime Minister from Singapore were all classmates, I vividly recall. There is a long history of Thai students studying at US universities, even including Prince Mahidol, who enroled at Harvard in 1916 to study public health. The future King Bhumibol was born there in Cambridge, Massachusetts, and a plaque commemorates his birth in what is now King Bhumibol Adulyadej Square just outside the entrance of the Harvard Kennedy School. The Thai Ministry of Education has expressed confidence that no Thai student will be denied a visa due to US plans to pause visa interviews and screen students' social media postings for political content. But there is little guidance around this new policy, and it clearly creates an administrative burden on embassy staff who are already suffering the effects of being understaffed due to ongoing State Department upheaval. Visa appointments will certainly be scheduled more slowly, and some students may not receive clearance to enrol by the fall semester. The new policies and threatened action have created anxiety for students enroled in US universities whom I spoke with for background. A graduate student in religion at Harvard told me she thought Mr Trump's singling out Harvard is an example of "killing the chicken to scare the monkey," to intimidate other schools into toeing the line on protests against the Gaza-Israel war. Although she does not plan to transfer to another university, she admits that she may need to reconsider her options if her visa is not cleared by early this month. Another Thai graduate student working toward a doctorate in anthropology at a large state university said the new policy created a stressful environment as he prepared to re-enter the US after doing field work abroad and was forced to consult frequently with immigration attorneys. Upon his return, he said the university was a different world, as it is sharply downsizing due to the loss of federal grant funds. The future of other students from Southeast Asia remains unclear. The Trump administration recently placed Myanmar on its travel ban list, leaving in limbo the more than 3,000 students enroled in US colleges. And Malaysia has announced that it will no longer award government scholarships to study at US universities to spare Malaysian students any potential disruption from volatile Trump administration policies. Before the administration makes any permanent bans against international students, it would do well to take a clear-eyed assessment of the benefits they provide. The ability of international students to enrol in US schools has always added to American soft power abroad. The annual State of Southeast Asia report produced by the Yusof Itzhak Institute has frequently aimed to gauge the extent of soft power in the region by asking "Which country would be your first choice if you [or your child] were offered a scholarship to a university?" In 2023, the last year the question was asked, the US remained the top preference for education, at 25.2%. This level of esteem cannot be bought, and yet, the administration seems intent on squandering it. As one Thai student studying in the US puts it, higher education is "America's last comparative advantage" globally. It would be a travesty if moves toward isolationism or protectionism spill over into the intellectual balance of trade represented by international enrolment in universities in the United States. It carries significant benefits on both sides of the ledger, the most significant of which may be the export of the idea of America as a place of opportunity and innovation. But for how long? Sally Tyler is an attorney and policy practitioner in Washington, DC. A frequent commentator on events in Southeast Asia, she is the author of the book, 'The Durian Chronicles: Reflections on the US and Southeast Asia in the Trump Era'.
Bangkok Post
21 hours ago
- Bangkok Post
Dollar at risk of being left behind
Europe and Asia could leverage US President Donald Trump's "America First" strategy for their own benefit, eventually spurring the development of regional tripolar FX blocs that could erode the dominance of the US dollar and reshape global markets. The dollar has struggled this year, especially since Mr Trump's April 2 tariff announcement. While the currency is on pace for one of its strongest weeks this year after jumping about 1% on July 28 following the announcement of US-EU trade deal, this short-term move doesn't change the long-term trends that could undermine the greenback's position. MOVING IN REVERSE Economic dominance in the future could largely depend on access to affordable, efficient energy to power artificial intelligence technologies. And in the race to dominate the industries of the future, the US is arguably going in reverse. It's retreating from the renewables space, as seen in the administration's recent move to eliminate many clean energy subsidies. The president appears to be making the bet that the US can maintain energy dominance indefinitely by relying on its own fossil fuel resources. This could ultimately result in uncompetitive power costs in the future, especially given that China is already dominating in clean energy technologies like solar and electric vehicles. As historian Adam Tooze argues, "for the first time in two centuries the West is no longer the leader in future technologies but the follower". TWIN DEFICITS While Mr Trump may be seeking to enhance American self-sufficiency, the administration's policies may actually be increasing the country's dependency on foreign capital. Mr Trump's recently passed budget bill -- which looks pretty ugly to fiscal watchdogs despite its name -- could cement the US's position as the world's biggest capital importer by adding an expected $3.4 trillion to the US deficit over the next decade, according to estimates by the nonpartisan Congressional Budget Office, potentially locking in 6% to 7% budget deficits for years. Importantly, the US has also been running current account deficits of roughly 4% over the past several years, and this widened to 6% of GDP in Q1 2025, according to the US Bureau of Economic Analysis. By spending beyond its means and running these twin deficits, the US will continue to require large amounts of foreign capital inflows. But unfortunately for Washington, this capital may soon be harder to come by, if both Europe and Asia seek to keep more of it closer to home. Europe is pushing for increased defense spending, as seen in its new goal to spend 5% of GDP on defence in the coming decade. While the bloc has agreed to increase US energy purchases through the recently announced US trade deal, much of that agreement remains up in the air and the volumes suggested are pretty unrealistic. Meanwhile, Asia has begun to trade more internally, as China has been focusing on export diversification. TRI-POLAR FX BLOCS A growing regionalisation of supply chains began during the pandemic and appears to be accelerating as Mr Trump seeks to drive production back to the US and all major global powers focus on securing regional raw material access (eg, rare earths and other critical minerals) for national security purposes. This shift could eventually create the foundation for true regional FX blocs across Asia, Europe and the Americas. This development would have a major impact on the global economy, currency values and capital markets, arguably providing a more balanced global economy with three poles of supply and demand, each attuned to their own regional dynamics rather than the current set-up whereby the global economy responds primarily to the Federal Reserve and US internal dynamics. Recently, European policymakers have discussed what ECB President Christine Lagarde has termed a "Global Euro" moment, one built upon a European Savings and Investment Union designed to foster both a European safe-haven asset that could eventually compete with US Treasuries and deeper, more liquid European capital markets to fund European infrastructure and innovation. Of course, this won't be an overnight shift. The dollar remains the world's dominant reserve currency, and the US debt market is estimated to be more than three times the size of Europe's, according to the World Economic Forum. But simply having a larger percentage of European capital stay at home could make a huge difference. Europe's current account surplus has averaged roughly $400 billion over the past few years, and Europe invests roughly $300 billion per year in offshore financial assets, according to the New York Times. Within Asia, Pan Gongsheng, Governor of the People's Bank of China, has recently highlighted China's interest in having the yuan play a larger role in a multi-polar currency world. Other officials soon followed, discussing how China plans to improve home market access for foreign capital while expanding opportunities for the Chinese to invest abroad. While China's capital account remains closed, Asian currencies already primarily trade off the yuan rather than the US dollar. Even though China faces challenges, such as its fight against deflation, its efforts on this front -- namely, boosting consumption and reining in excess supply, especially in the renewable energy space across solar, wind and batteries -- could ultimately help attract more foreign capital by boosting China's growth profile and corporate earnings. There is obviously no guarantee that these measures will be successful, but the government's intense focus on achieving these goals is evident. The recent decision to provide $12.4 billion in childcare subsidies suggests a potential policy Rubicon has been crossed, as China has typically resisted these types of direct fiscal stimulus measures in the past. In a world of currency blocs, both Europe and Asia could emerge as potential winners, as they erode the US's position as the world's financial powerhouse. So while many investors may get lost in the short-term currency noise, it might be wise to instead focus on the long-term signal. Reuters
