US trade with the EU is out of whack. Trump needs to stay tough on tariffs to fix it
President Donald Trump is threatening 50% tariffs on all imports from the European Union if a trade deal can’t be reached by July 9. The recent ruling from the Court of International Trade is unlikely to slow down Trump’s efforts, given the multitude of loopholes and a possible Supreme Court reversal. The outcry from Europe is loud and multilingual — and we need to ignore it.
Early in my tenure as ambassador to the EU during Trump’s first term, I invited members of the European Round Table to lunch. I asked these CEOs of the biggest companies in Europe if they owned property in the U.S. All said yes. "But how do you eat in America?" I asked. "What do you drive? Do you bring your cars and food with you?" They laughed and said that the reluctance for our products has nothing to do with U.S. food or manufacturing. That those closed doors are European protectionism. In short, our cars are reliable, our vegetables healthy, they just want to win.
When it comes to trade, they have won for decades and that has to change.
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When Trump spoke with EU chief Ursula von der Leyen on May 25, she called her conversation with him, a "good call" and promised that "Europe is ready to advance talks swiftly and decisively," tacking on: "To reach a good deal, we would need the time until July 9."
What the two in conversation means is that the U.S. is now asking them to dig deep into their red lines when it comes to us. Europe loves a show without a result. I know what it’s like to negotiate with them — that they can move slower than a French escargot — and the result is escargot-sized too. It’s nice. It’s cosmetic. It’s meaningless.
We’ve gotten into trade talks many times before, with leaders like von der Leyen pleading for more time, promising they’ll get serious. The reality is that they will have meetings but they will refuse to eliminate or even budge their red lines on trade for the United States. They have to.
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America deserves to be treated differently than any other trading partner, and this counts for our asks with respect to China as well. If we are going to take up the weapons, the EU needs to back us on sanctions. We want the EU to come down on the countries in their bloc that are operating in their self-interest as opposed to contributing to the alliance’s economic interests. We deserve reciprocity on trade with concessions that are deep and material.
The U.S. trade deficit with the EU is ballooning. It has gone from $45 billion in 1999 to $235 billion in 2024. If we include services last year, the trade deficit only reduces to $161 billion.
U.S. presidents from Clinton to Trump were slapped with significant trade resistance from the EU. Unwilling to concede, even under unilateral pressure, they cried out about what they perceived to be U.S. overreach and always chose multilateral solutions — like reinforcing the WTO — to find perceived stability and predictability.
When Trump said recently, "They’ve treated us very badly over the years," he was spot on.
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In 1999, when President Bill Clinton was busy with the "banana wars," arguing that American fruit importers should have freer access to the EU market, the overall U.S. global trade deficit was at a then-record of nearly $170 billion, with over $43 billion coming from the EU. In 2002, George W. Bush imposed steel tariffs to protect domestic producers, during a year when our trade deficit with the EU had risen to $86 billion. During Trump’s first term, our trade deficit went from $151 billion in 2017 to $182 billion in 2020. Now at $235 billion, you can understand why he’s pissed off.
Trump is not negotiating, he’s deadly serious. He wants a fair share of their market and for the EU to treat us completely differently than any other trading partner because we’ve earned it. Not just from a decades-long trade imbalance, but from the security guarantee America has provided for just as long. They need to get over their stringent value-added tax, health and digital regulations and make choices that reflect our shared history.
Trump is doing something stark and immediate as the EU gets ready to play rope-a-dope with us yet again. He is saying you can have all your regulations and juicy red European tomatoes, but you have to pay 50% tariffs. Is that really worth it?
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Europeans should be exposed to American products. Trump is not forcing anyone to buy them, just to have access. If the way Americans do things don’t meet with European taste or sensibility, then let the market speak for itself. And vice versa. All we’re asking for is a fair shot.
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I predict the EU will waltz us through their organic, manicured gardens again with no result. I think Trump predicts this too. July 9 will roll in with no substantial concessions made by the EU, forcing the president to impose significant tariffs. They will cause extreme pain on both sides, but negotiations between us are like breaking a horse. Trump is bound and determined to not have them bend the knee, but rather to treat us differently than other trading partners. And when they do, I’m sure we will listen. If Americans like European products better than ours, fine. American manufacturers will have to figure it out.
Readjusting the trade imbalance is not a lot of money in the grand scheme of things, but it’s a sign of gratitude and respect for what the U.S. has done in the last 80 years. Many Europeans still claim that the Marshall Plan was sponsored by the U.S. for Europe’s benefit and ours. That’s preposterous.
Think of it this way. If two friends, one richer, one poorer, go out to dinner regularly and the richer one always pays, that makes sense. If the poorer friend needs surgery and the richer one offers to cover it, that still makes sense. Theirs is a valued meaningful friendship after all. But if one day, the poorer friend comes into wealth and has the opportunity to help the person who has supported him consistently for decades and then refuses, there is a major problem.
The U.S. and the EU are those two friends. No one wants this relationship to crumble, and all eyes are on the EU, because the world knows how long the U.S. has been picking up the check. We’re asking a friend a favor because it’s simply their turn to pay.