The EU needn’t have yielded to the US on a trade deal

The economic consequences will likely be immediate and severe. European exporters now face tariffs nearly ten times higher than the previous trade-weighted average of 1.6%. Volkswagen alone has reported a $1.5 billion hit due to higher US tariffs.

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But this is just part of the problem. The real damage is what the EU agreed to pay for the ‘privilege’ of maintaining access to the US market: buying $750 billion worth of US energy over three years and investing another $600 billion in the US economy.

These staggering sums will inevitably divert resources from European development and innovation while legitimizing bilateral coercion over the multilateral rules-based World Trade Organization system. As critics have rightly pointed out, this massive outflow comes directly at the expense of domestic investment.

What makes the EU’s surrender especially troubling is how unnecessary it was. As America’s largest economic partner,  the EU has considerable leverage. The bloc’s $270 billion services deficit with the US offered clear avenues for retaliation, from digital taxes to restrictions on American tech giants.

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Weeks earlier, anticipating a stalemate, European policymakers had prepared counter-tariffs targeting $107 billion worth of American goods. But the EU had far more potent weapons at its disposal. Its Anti-Coercion Instrument, for example, could have barred US companies from government contracts, revoked intellectual-property rights and imposed broader trade restrictions. Yet, national leaders, fearing Trump’s retaliation and under pressure from domestic industries eager to maintain access to the US market, refused to authorize Von der Leyen to use any of these tools, forcing her to negotiate from a position of weakness.

The contrast with other US trading partners could not be starker. When the UK secured a 10% tariff rate from Trump in May, European leaders expressed concern about accepting similar terms. Now, they hail 15% tariffs on EU exports as a diplomatic breakthrough. Britain, acting alone, negotiated better terms than the EU as a whole.

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This failure exposes the fundamental weakness of European governance. Lacking a true EU-wide governance system, the bloc remains incapable of translating competing national agendas into a unified position. With Von der Leyen hamstrung by member states prioritizing narrow domestic interests over European cohesion, the result was a deal that pleases no one but Trump and locks Europe into a state of structured dependency.

The EU’s failure to push back against Trump is especially troubling given its stated goal of achieving strategic autonomy. Some may argue that the deal—technically not a formal trade agreement, but rather a set of statements outlining an ongoing negotiation process—buys time. By appeasing Trump, the argument goes, the Commission has maintained transatlantic ties while creating space for future carve-outs.

But if this were truly a time-buying strategy, we would expect the EU to take concrete steps to advance strategic autonomy: boosting defence spending, accelerating supply-chain diversification and investing in retaliatory capabilities. 

Instead, after years of pledging to reduce reliance on foreign powers, EU leaders chose to replace Russian energy imports with American supplies and commit to massive purchases of US military equipment.

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Europe’s subordination both reflects and reinforces the continent’s dependence on US power. It  has created a structural imbalance that extends across defence, trade and energy, leaving Europe in a state of permanent vassalization. Trump’s ability to extract sweeping economic concessions and defence-spending commitments shows how effectively the US can weaponize Europe’s security anxieties to pursue broader geopolitical objectives. The $600 billion investment pledge, much of it earmarked for military-equipment purchases, forces Europe to subsidize American defence contractors while undermining its own industrial base.

By giving in to Trump’s demands, the EU validated Trump’s transactional approach, emboldening not only future American administrations but also other global powers eager to turn trade into an instrument of geopolitical coercion. While the immediate crisis may have passed, the long-term damage to EU credibility and autonomy will be long-lasting. The widespread perception that Europe surrenders without resistance will undoubtedly invite further challenges to European interests.

Until European leaders are able to break the cycle of dependency by empowering EU institutions to act decisively against external coercion, these humiliating capitulations will only multiply, reducing the continent to a prosperous yet powerless appendage of the US empire. ©2025/Project Syndicate

The author is professor of European Union Law at HEC Paris and visiting professor at the College of Europe in Bruges and Natolin.