Ursula von der Leyen faced intense pressure on Sunday as she sat beside Donald Trump at his Turnberry golf course ahead of gruelling trade talks. Emerging less than an hour later, the European Commission president announced that the worst of Trump's tariff threats had been avoided, but recriminations from within the EU began almost immediately.
Under the deal agreed in Scotland, an economically devastating trade war has been prevented. However, European leaders are eyeing the cost of being locked into tariffs of 15% on most EU exports to the US, up from an average of 4.8%. French and German leaders, following Hungary's Viktor Orbán, focused on this outcome rather than the potential damage from a US president with an intense dislike for the EU.
French Prime Minister François Bayrou said the EU had capitulated, describing Sunday as a 'dark day'. He thought Trump's threatened 30% rate could at least be lowered to match the 10% tariff deal secured by the UK. The irony of Bayrou, beset by factional warring, berating von der Leyen for failing to present a united front was lost on many in Brussels, especially given Paris often causes friction within the EU.
Von der Leyen can argue that most trade concessions, including a commitment to buy US gas, matter little as purchases were likely anyway. She is hopeful the deal can circumvent Trump's obsession with the US pharmaceutical industry, which has been left out of all trade deals. Brussels hopes the 15% tariff will apply to EU-based pharma exports to the US, a concern for Ireland.
David Henig of the European Centre for International Political Economy said the result would probably hit trade and economic growth on both sides of the Atlantic, but only marginally. HSBC economists said the 15% tariff would be offset by reduced uncertainty, leaving a 'fairly marginal impact'. Much remains to be negotiated, and von der Leyen must hope German Chancellor Friedrich Merz and Italy's Giorgia Meloni refrain from criticising the deal.
The EU's weak negotiating position may encourage leaders to consider Mario Draghi's proposals to reduce internal trade barriers, estimated at almost 50% on goods and 110% on services. However, von der Leyen's trade fudge may allow the EU to continue muddling through, leaving Draghi's report to gather dust.
