EU could win trade war with US

The US-EU trade deal has been heavily criticised as a capitulation by the bloc. But if you dive into the agreement details, the European Union is likely not only to suffer less than the US but may even see its economy benefit from the new global tariff regime.

- Joachim Klement

The EU, on July 28, came to an agreement with the US that set base levies on EU goods at 15%, below the 30% rate US President Donald Trump had threatened, though still much higher than tariffs were before the trade war began.

Many analysts and journalists alike are adamant that the trade deal the EU struck was a big win for the US and a major loss for the EU. Even French Prime Minister Francois Bayrou seems to think so.

The main thrust of the argument is that the EU should have been strong enough to inflict measurable pain on the US, but instead made lots of promises without getting much in return. Plus, some European leaders are concerned that their exporters will suffer from lower US demand in the short term.

Allow me to disagree and state that, as it stands today, the EU is winning the trade war.

First, let us compare the EU trade deal with the agreement that one of Europe's major competitors, Japan, struck with the US just five days earlier.

Both countries were hit with a baseline tariff rate of 15%, and both made much-derided promises to boost investment in the US. While Europe's total pledge is larger in nominal terms, it only represents around 7% of the EU's GDP compared to over 13% for Japan.