A Vassal’s Bargain: How Europe Signed Away Its Autonomy

‘Strength through unity.’ This is the mantra that is commonly invoked to justify the EU’s exclusive competence in the area of international trade. EU member states, unlike countries such as Japan, Singapore, or the United Kingdom, no longer negotiate and conclude their own trade agreements with, say, the U.S. or China. Instead, the EU Commission negotiates trade agreements for them, which are then ratified by the Council by qualified majority. Member states do not have a veto; they have transferred their sovereignty to the EU and will be bound by agreements they may regard—in one or more respects—as disadvantageous to themselves. 

This loss of national sovereignty, we are told, is far outweighed by the collective advantages centralised negotiation by the Commission secures for every single member, even those that benefit less than others. EU competence is presented as a win-win situation: by combining the economic weight of all member states, the Commission maintains, the EU increases the negotiating power of each and achieves objectives and extracts concessions from trade partners which individual member states could never hope to secure. In short, the storyline, as it so often has been, is “There is no sovereignty except when shared.”

This myth has survived, notwithstanding ample evidence to the contrary: the EU has promoted rather than limited mass migration; von der Leyen’s so-called Great Green Transformation has led to deindustrialisation; and, while the Green Deal is dismantling Europe’s traditional industries, the EU has failed to establish fast-growing high-tech industrial capacities able to compete with the U.S. and the Far East. 

The EU today is in economic freefall, but the prevailing official attitude remains remarkably sanguine. The EU institutions and most national governments are wilfully closing their eyes to rapid social and economic disintegration and either adopt a policy of denial or maintain that these setbacks are transitory, as Europe will inevitably emerge as the winner in the new green world economy. Critics and many Eurosceptics who see the post-Maastricht EU as being in need of a radical overhaul often acknowledge these failures, but even they frequently exempt the internal market and the EU’s international trade policy from criticism and point to both as undeniable EU success stories.

The EU-US trade deal shatters this view, at least where the EU’s trade policy is concerned. The trade accord set out in outline by von der Leyen and Trump at their joint press conference at Trump’s Scottish golf resort on July 27th may be, as Donald Trump called it, the “biggest trade deal ever” for the US. For the EU, in contrast, it is almost certainly the worst trade agreement and commercial transaction ever. 

Let’s look at the key provisions of the deal:

Tariffs: The United States will impose a 15% baseline tariff on most EU exports—including cars, semiconductors, and pharmaceuticals—and a higher rate of 50% on steel and aluminium imports from the EU. No tariffs will be applied to the aircraft industry, including components and semiconductor equipment from the EU—both areas where U.S. exports to the EU exceed imports from the bloc.

In turn, the EU agreed to impose no further tariffs. U.S. exports will remain subject to the EU’s existing tariff schedule, which averages ~1.6% on non-agricultural goods. 

Energy: The EU committed to purchase roughly $750 billion worth of U.S. energy exports (LNG, oil, nuclear fuel, etc.) over the three-year duration of Trump’s second term (about $250bn per year).

Foreign Investments: von der Leyen pledged $600 billion worth of EU investments into U.S. investment projects—primarily private sector—reportedly including energy, automotive, pharmaceuticals, and possibly defence contracts. These funds will come from EU taxpayers and private firms and investors. 

Armaments: The EU also agreed to purchase a “vast amount” of U.S. military equipment, though the exact figure or contracts remain unspecified.

A trade deal could hardly be more one-sided. Trade agreements are commonly based on reciprocal tariff rates. Only in agreements with developing countries do advanced economies sometimes grant asymmetrical advantages to the other side. Yet, von der Leyen has agreed to a deal that gives all the advantages to the U.S., with virtually nothing in return. And so the winners are all on the U.S. side. 

The biggest winners are without doubt the U.S. military-industrial complex and the U.S. oil and gas industries. EU member states have pledged to increase their military spending by hundreds of billions every year. Much of that additional spending will be spent not in Europe, but on U.S. arms imports. The U.S. energy sector would also hugely increase energy supplies to the EU, to the point where they would have to divert almost their entire trade flow to the bloc or increase production markedly. In comparison, Russia’s total direct energy exports to the EU totalled just €23 billion last year, although Russia is selling energy at lower prices than the U.S. U.S. pharmaceuticals, a sector long favoured by von der Leyen for personal or arguably personal financial reasons best known to herself, the European Commission confirmed a day after the deal was announced, will also benefit from effectively tariff-free access to the U.S. market, while the U.S. will impose tariffs at the uniform 15% rate on EU imports in this sector.

EU car makers were also dealt a bad blow by von der Leyen. The U.S. will impose the 15% uniform rate on all EU imports, whilst the EU has agreed to lower its car tariffs from 10% to zero, Commission trade spokesperson Olof Gill told Politico. The Commission further has not ruled out that the EU might accept cars approved to U.S. automotive standards, as Japan did under the U.S.-Japan trade deal. 

German car manufacturers have described the agreement as a ‘bad deal’ that will continue to burden the sector. However, the real loser is not the automakers, which will move more production to the U.S., but their workers. Ferdinand Dudenhöffer, the director of Germany’s Center Automotive Research, estimates that up to 70,000 jobs across European car companies and their suppliers could be lost as automakers move production to the U.S. to skirt the 15% tariff.

Finally, in the new technologies sector, especially IT, digital services and artificial intelligence, von der Leyen surrendered unconditionally. These fast-growing sectors, which require highly skilled tech-savvy specialist knowledge, are areas where the EU has been lagging practically the entire developed world for many years. They depend heavily on imports from the U.S. and the Far East, and the development gap between declining old-tech Europe and the rising new-tech world is especially stark here. The Commission agreed to 15% tariffs for most EU exports to the U.S., while U.S. firms can continue to dominate the EU internal market based on zero or negligible tariff rates—a humiliating blow to the proponents of a technologically more sovereign Europe, which von der Leyen rather ineptly tried to pass off as a success when she said, “U.S. AI chips will help power our AI gigafactories and help the U.S. to maintain their technological edge.” 

Off the record, several Commission officials have expressed disbelief at von der Leyen’s poor negotiating skills, but they are quick to point out that the EU’s digital rulebook—and in particular the Digital Markets Act and the Digital Services Act—has emerged unscathed. The verdict on whether that may be regarded as a ‘success,’ however, is still pending. Even if the EU were to withstand the continued pressure by Big Tech players like Meta and Apple, the real losers in all this may be free speech—and hence the general public in the EU. For the principal objective of the Digital Services Act never has been the regulation of anti-competitive behaviour by U.S. tech giants, nor excessive profits, nor indeed the protection of European minors from obscene material, but the surveillance of online user content and the censorship of undesirable political opinions in Europe.

The EU-US trade deal announced on July 27th is only a framework agreement with many loose ends to be tied up. However, the parameters agreed upon are so heavily skewed in favour of the United States that many analysts have expressed doubts about whether the EU may even be able to meet its commitments. Take energy: In 2024, the EU imported a total of €77bn ($83bn) of energy products from the U.S., according to Eurostat data. The deal would require the EU to triple its energy imports from the U.S. over the 2026-2028 period. As von der Leyen appears to have obtained no price guarantees from Trump in return for committing Europe to buy nearly all of the U.S.’ excess energy, the deal will leave the EU in a state of extreme energy dependency on the U.S., which makes a mockery of the bloc’s allegedly excessive pre-2022 reliance on Russian energy imports even at its peak.

For European car manufacturers, there is the added blow of higher tariffs on cars and parts produced in Mexico, which remain at the higher 25%. There is also uncertainty whether the EU, like Japan, will consent to take vehicles approved to U.S. automotive standards. According to Politico, the Commission is floating the idea of matching U.S. autonomous driving standards, which was mentioned in Monday’s technical briefing as a possibility. This is but one of the many loose ends which, if von der Leyen’s negotiation skills displayed in Scotland are anything to go by, are likely to be resolved in the United States’ favour. Others include the categories of agricultural products, which would enjoy a zero-zero tariff relationship with the U.S., and the distinction between ‘non-sensitive’ and ‘sensitive’ agricultural goods, where the U.S. is also likely to flex its negotiating muscles.

Even less detail has been given on defence. However, EU officials acknowledged that the massive increase in Europe’s military budgets will favour U.S. firms. As most segments of the European armaments industry lack the economies of scale and synergetic advantages enjoyed by their U.S. counterparts, EU member states will buy most of their additional high-end military equipment from across the Atlantic. From a U.S. perspective, Donald Trump must be given credit for having reduced the declining European economies into little more than tax farms for reducing the large U.S. trade deficit and for the co-financing of America’s vast military-industrial complex.

In consequence, much of the massive increase in military spending announced by German Chancellor Merz will not buttress Germany’s defence industry but find its way into the balance sheets of US defence conglomerates. In the years from 2005 to 2020, Merz greatly increased his personal net worth with lucrative advisory posts for U.S. law firms and U.S. investment colossus Blackrock. Now, it appears, it is payback time for him. The same, no doubt, is true of von der Leyen, who has successfully suppressed but never been willing or able to refute corruption allegations related to the suspiciously secretive and immensely lucrative contracts she awarded to U.S. consultancy firms and pharmaceutical corporations, which, to date, define her tenure as German defence minister and EU Commission president from 2013 to the present.

Finally, there is the slight problem of von der Leyen’s pledge that the EU will invest at least $600bn into US investment schemes. If these funds are to come from private sources, as she implied, she had no authority to make investment decisions for private companies. In effect, if private EU foreign investment falls short of that sum, it will again be the European taxpayer who has to pick up the bill.

On April 1st, 2025, von der Leyen issued a stark warning to Donald Trump over his tariff policy: “Europe did not start this confrontation … but my message to you today is that we have everything we need to protect our people and our prosperity… We will negotiate from a position of strength and take firm countermeasures if necessary. All instruments are on the table.” 

These resolute words turned out to be an April Fool’s joke. The deal she in fact agreed to just under four months later is a humiliating climbdown from her earlier hyperbole. Not only did she consent to an asymmetrical trade relationship that allows the U.S. to impose a 15% baseline tariff on most EU imports in return for zero or minuscule EU tariffs on most U.S. exports, but she further agreed to divert anything upward of €1.8 bn of public and private EU funds to the U.S., starving Europe of funds desperately needed to modernise its own increasingly outmoded and outperformed industrial base.

For much of their history, the ancient Persian and the more recent Ottoman Empires relied on a system of client or tributary states amongst the neighbouring states on their periphery. These states were obliged to render regular tributes to their Persian and Ottoman overlords, which often involved financial contributions and military support, whilst also being a token of their submission. In return, these tributary states retained a degree of internal autonomy to mismanage their domestic affairs as their rulers saw fit. Throughout its history, and contrary to European delusions of adequacy, the EU has always been the junior partner of the U.S. in a progressively asymmetric transatlantic relationship. Von der Leyen, with her calamitous policy mix of open-door mass migration, COVID shutdowns, and the green transformation and deindustrialisation of the European economies, has hastened the widening power imbalance between Europe and America. It may legitimately be regarded not only as the logical conclusion of her policies but also as their ‘success’ that she has now formally recognised the EU’s diminished status as a tributary vassal of the United States. Von der Leyen’s many vices are being paid for by Europe at very high prices. Honi soit qui mal y pense!