In a major victory for free trade advocates, the United States and the European Union have reached a new trade agreement. This announcement took place just before the most recent round of tariff negotiations between the US and China. This deal has arrived against the backdrop of years of sorely-felt tensions over allegedly duplicitous trade practices, especially from our European allies. Fortunately, former President Donald Trump has rightly condemned these practices. His conclusion is that they damage American firms and contribute to an increasing trade deficit.
Last year, EU exported $236 billion more in goods to the United States. Its exports to the bloc did not meet expectations. Trump has turned this imbalance into a huge headline issue. He does see it as a crime, with massive American wealth being lost to truly avoidable travesty. Now US and EU leaders have made a pact to take this worry-creating issue seriously. Taken together, these actions show the Trump administration’s resolve to change America’s trade terms with other countries—with all of them.
Those negotiations, at least on the US side, were marked by both urgency and disarray. Those conversations led to an in-person meeting that went a long way toward sealing the agreement. As part of the deal, both sides committed to the halt of elevated tariffs for a further 90 days. This initial phase focuses on addressing the trade deficit, marking a collaborative approach towards rebalancing trade relations.
Both President Trump and European Commission President Ursula von der Leyen can justifiably claim victory from this agreement. Trump’s hands-on involvement has been vital in pushing through this deal, reflecting his administration’s commitment to altering how the US engages in international trade.
“We have to rebalance it. We have an excellent trade relation. It’s a huge volume of trade that we have together. So we will make it more sustainable.” – Ursula von der Leyen
The agreement’s implications go far beyond the US and EU. The Trump administration has already concluded such deals with other countries, including Japan, the UK, Vietnam and Indonesia. These agreements, which enjoy strong bipartisan support, signal a fundamental change in approach, intended to reshape America’s trading relationships with the world.
Looking forward, the United States is poised to engage in significant trade negotiations with both Mexico and Canada and separately with China. The relationship with China is particularly nuanced. Officials in Beijing have bitten much deeper than other US trading partners. This US-EU arrangement could not have come at a more important time. This would provide America with needed leverage for historic negotiations taking place in Stockholm, Sweden on Monday and Tuesday of next week.
The Trump administration projects this deal alone to bring in over $90 billion in new tariff revenue. It claims to want to draw down $600 billion in investment. Taken together, these figures provide further context for the intense economic stakes in these negotiations. They demonstrate the administration’s resolve to increase American prosperity by pursuing smart, beneficial trade deals.
As both sides celebrate their respective achievements, the true impact of this agreement will likely depend on its implementation and how effectively both parties can navigate future challenges in international trade relations.