To President Trump’s supporters, the one-sided trade “deals” negotiated with the United Kingdom, Japan and most recently the European Union may seem like victories. They may seem like a vindication of the president’s supposed street-savvy negotiating style.
In reality, they are self-defeating in their economics and harmful to America’s alliances.
Under the trade arrangement concluded at the end of July, the EU will scrap tariffs on U.S. imports and commit to large-scale purchases on American energy and defense systems, as well further U.S. investment. In exchange, the EU gets a U.S. tariff of 15 percent, vastly exceeding average tariff rates across the industrialized world in the post-war era.
At the risk of stating the obvious, the three “deals” are not trade agreements in any meaningful sense. They lack the legal weight that foreign trade agreements carry. Nor do they entail a liberalization of trade — rather, they ratify America’s imposition of new tariff barriers against some of its closest allies, while also extracting concessions from these nations under threat of even higher tariffs.
Because tariffs are effectively taxes on Americans, the U.S. economy and consumers are the first and foremost losers of these new “deals,” especially in sectors where imports from the three partner economies serve as inputs into U.S. economic activity. The BMW plant in Spartanburg, S.C., to cite just one example, uses a lot of EU-made components; barring special, yet-unannounced carve-outs, its production has just become less competitive. Jobs will be lost, just as they were lost in the aftermath of Trump’s first-term steel and aluminum tariffs across industries that rely on those metals.
The geopolitical ramifications are even more pernicious. “It’s about security, it’s about Ukraine,” the EU Trade Commissioner Maros Sefcovic said to justify the European concessions back in July, not anticipating that the deal would have little impact on the administration’s planned rapprochement with Russia, on full display in Alaska on Friday.
American alliances since 1945 have been sustained by a perception of the U.S. as a fundamentally different kind of global superpower, one that was neither predatory nor seeking domination for its own sake. While Russia and China may have had control over their clients or over nations that they subjugated by brute force, the U.S. had real friends — at least until now. Europeans, the Japanese, or the Koreans have generally hoped for our leadership, comfortable in the knowledge that our decisions will be informed, at the very least, by a basic sense of decency.
That sense is being shaken to the core. Trump is transforming a rules-based, voluntary system of international cooperation, imperfect as it was, into a system of quasi-colonial extortion. The MAGA camp might derive a sense of satisfaction from humiliating “free-riding” U.S. allies, but the resulting arrangements are not sustainable. Canada and Mexico have learned that even a proper free trade agreement negotiated with a Trump administration and ratified by Congress offers little protection against new arbitrary tariffs.
It will soon dawn on voters in Japan, the U.K. and the EU — if it hasn’t already — that their country’s trade deals are both hopelessly unbalanced and subject to change by Washington at a moment’s notice.
Even if the deals hold in the short term, they are bound the produce a political backlash, which will make the prospect of working together with the U.S. on matters of mutual interest far less likely.
There was a reason why the Japanese government postponed the announcement of its trade deal with the U.S. until after its recent upper house parliamentary election, from which it has emerged badly bruised. Similarly, the European Commission will have a hard time selling its deal with Trump to member states — whose cooperation is essential if the promises of hundreds of billions in U.S.-bound investment and purchases of American goods are ever going to materialize.
For decades, there have been voices in European politics decrying America’s real or imaginary domination of the old continent. Today, they have a real, tangible grievance they can hold on to: The EU is essentially promising a large transfers of wealth to the U.S., in the form of future military and energy purchases as well as outbound investment, while acquiescing to being subjected to a trade policy that would have been essentially unthinkable a few months ago.
If the Trump administration were purposefully trying to peel the EU, the U.K. and Japan away from America’s system of alliances, it would be hard-pressed to find a more surefire method than these deals. They put to rest a benevolent vision of America that has underpinned our soft power worldwide for 80 years.
Dalibor Rohac is a senior fellow at the American Enterprise Institute.
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