Alberto Alemanno at Project Syndicate:
By agreeing to 15% tariffs on most exports to the United States, the European Union has capitulated to Trump’s zero-sum worldview. In doing so, it has abandoned the principles of multilateralism that have long guided global trade.
The economic consequences are immediate and severe. European exporters now face tariffs nearly ten times higher than the previous trade-weighted average of 1.6%. Volkswagen alone has reported a €1.3 billion ($1.5 billion) hit due to higher US tariffs.
But the tariff rate itself is just part of the problem. The real damage lies in what the EU agreed to pay for the “privilege” of maintaining access to the US market: a commitment to purchase $750 billion worth of American energy over three years and to invest another $600 billion in the US economy.
These staggering sums will inevitably divert resources from European development and innovation while legitimizing bilateral coercion over the multilateral, rules-based World Trade Organization system.
More here.
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