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The trade deal struck between the EU and US President Donald Trump in late July was meant to be part of a bargain for business in Europe — swallow a 15 per cent tariff rate on European exports to the US in exchange for more economic certainty.
After being criticised for bowing to the equivalent of a schoolyard bully in the trade world, European Commission president Ursula von der Leyen defended the deal because it provided “certainty in uncertain times” and “predictability” for businesses. “In these turbulent times, this is necessary for our companies to be able to plan and invest,” she said.
But it has not worked out quite like that, as with another part of the implicit bargain in the trade deal: the continued co-operation ultimately between the US and Europe on the war in Ukraine. Just as questions over the US commitment to defend Ukraine persists, uncertainty still overhangs business.
Part of the issue is detail and execution. The EU has made some proposals for the implementation of the deal but the US has been slower, so there is some impatience on this from Brussels. And Trump continues to roll out policy surprises that have the potential to upend trade.
Take the pharma industry. In theory, the transatlantic deal provides clarity to cap tariffs on European medicines at 15 per cent. But Trump has announced measures to decrease the US dependency on foreign pharmaceutical players and to lower prices for American consumers, leaving the European pharma sector guessing what could come next.
More generally, some European chief executives and their advisers are holding off on potential investments and acquisitions until the economic landscape becomes more stable — although some acknowledge that it feels like waiting for Godot.
“There is still far too much unpredictability for companies,” one lawyer advising on corporate deals told me. Another says executives are still “holding their breath” on whether the trade deal will mean more transatlantic stability.
One big stumbling block to stability in EU-US business relations is the politically sensitive topic of regulating Big Tech. Only days after Brussels and Washington outlined the details of their trade deal, Trump threatened to impose tariff and export controls on countries that have taxes, rules or laws on tech companies that “discriminate” against the US.
Brussels had been proud of resisting American pressure to give in on changes to its landmark digital regulation. It has argued it is the bloc’s sovereign right to enforce rules on companies operating in its single market and made clear the landmark digital legislation were non-negotiable during the trade talks
But since Trump’s return to office, US tech executives have been banking on the White House to lobby against what they see as hostile European rules. And Trump’s renewed digital threats, and his public engagement with top Silicon Valley brass, has made clear that one vague deal wouldn’t alleviate American pressure on the bloc over tech regulation.
Officially, Brussels is going full steam ahead with the enforcement of its digital rule book. It is set to decide on a wide range of investigations into US tech companies, including Elon Musk’s X, Apple and Facebook owner Meta. The EU’s competition chief Teresa Ribera told the Financial Times that Europe should “avoid the temptation of being subordinated to others’ interests” and that Brussels should even be prepared to walk away from a trade deal if Trump acts on his threats. But the Americans could well be tempted to call Ribera’s bluff.
So far, von der Leyen’s strategy has been to appease Trump rather than provoke him. The majority of European leaders support that approach, especially given Ukraine’s dependence on the US to fight Russia. European officials read Ribera’s call more as a plea to her boss than actual European policy.
The internal dilemma for Brussels was painfully put on display when a planned announcement by Ribera on an antitrust fine against Google was delayed for several days after intervention by the bloc’s trade chief Maroš Šefčovič. The announcement ultimately pushed to a Friday afternoon, without any formal appearance at a press conference, not even a token one by Ribera herself to defend the decision on the fine.
That was yet another sign that in a world where the geopolitical order is in upheaval, it is hard for business to find stability and certainty.
