Fu man, Jason
A icle
Does T ump Know Wha He Wan s om Eu ope o How o
Ge I ?
In e economics
Sugges ed Ci a ion: Fu man, Jason (2025) : Does T ump Know Wha He Wan s om Eu ope o How o
Ge I ?, In e economics, ISSN 1613-964X, Sciendo, Wa saw, Vol. 60, Iss. 3, pp. 199-200,
h ps://doi.o g/10.2478/ie-2025-0037
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ZBW – Leibniz In o ma ion Cen e o Economics 199
Le e om Ame ica
DOI: 10.2478/ie-2025-0037
In e economics, 2025, 60(3), 199-200
JEL: B27, F13, F43
Does T ump Know Wha He Wan s
om Eu ope o How o Ge I ?
Vice P esiden JD Vance wan s o es o e Ame ican manu ac u ing. T easu y Sec e a y
Sco Bessen in ends o build a ee ade coali ion agains China. Council o Economic
Ad ise s Chai man S ephan Mi an wan s a weake dolla . Comme ce Sec e a y Howa d
Lu nick wan s a pe manen new e enue sou ce. Ad ise Pe e Na a o wan s o unleash
d ama ic change and possibly e en chaos. Bu none o hem a e he P esiden o he Uni -
ed S a es, and he P esiden keeps changing his mind on bo h he b oad goals and speci ic
ins umen s o his in e na ional economic policy.
P esiden T ump has had wo consis en iews abou ade o decades. The i s is ha
ade de ici s in goods (he igno es one o Ame ica’s s onges expo s, se ices) e lec a
ne loss o he Uni ed S a es. This p o i -and-loss s a emen shows a $240 billion “loss” in
2024 ( he ade de ici in goods) and has had consis en “losses” o decades. O cou se,
e e y economis knows his is no a loss; you could jus as easily (and jus as inaccu a ely)
say ha he Eu opean Union los ca s, pe ume, machine ools and medical equipmen o
he Uni ed S a es. The idea ha olun a y ansac ions migh bene i bo h sides does no
seem o emos on he P esiden ’s mind.
The second iew is ha he ade de ici has come abou because Eu ope has been “un ai ”
o he Uni ed S a es. Some o ha alleged “un ai ness” is, o example, a 10% a i on im-
po s o U.S. au omobiles – some hing I ag ee is a mis aken Eu opean policy bu one ha
Eu opeans su e om mo e han Ame icans. Rega dless, Eu ope and he Uni ed S a es
ha e mos ly low a i s punc ua ed by a ew high ones, a e aging ou o a es o abou 2%,
a leas un il he new ade wa . Add essing hese a i s could be a easible and desi able
objec i e o policy, some hing I will e u n o.
Howe e , T ump’s mo e conside able con en ion is ha Eu ope is un ai o he Uni ed S a es
because o alue-added axes (VATs). The a gumen , which jus abou e e y economis disa-
g ees wi h, is ha VATs apply o impo s bu no o expo s, so hey disc imina e agains ade.
VATs apply equally o domes ic p oduc ion and impo s, so hey a e neu al, and ha neu al-
i y is cemen ed by exemp ing expo s om VATs so hey will no be double axed when sen
ab oad. Rega dless o he economics, ge ing Eu ope o elimina e i s VATs is no a easible o
desi able policy objec i e. The ade wa will ne e end i ha is he Uni ed S a es’ demand.
T ump’s bigges con en ion is ha he Eu opean Union i sel was designed o ake ad an-
age o he Uni ed S a es. No only is his a baseless slande – i any hing, he Uni ed S a es
was en husias ic abou he o ma ion o he Eu opean Union – bu ge ing Eu ope o dis-
man le he Eu opean Union is also an e en less easible o desi able policy objec i e han
ge ing Eu opean coun ies o elimina e hei VATs.
One possibili y is ha he Uni ed S a es wan s g ea e ma ke access. I he ag eemen
we e me ely abou lowe a i s, i would be echnically easy o inish a quick nego ia ion;
he upside o bo h economies would be ela i ely small, bu s ill wo hwhile. Fo his o
happen, he Uni ed S a es mus be willing o d op i s 10% ac oss- he-boa d a i . A mo e
conside able upside would come om deepe in eg a ion like he T ansa lan ic T ade and
In es men Pa ne ship (TTIP) ha was unde nego ia ion a decade ago. S ill, I see li le in-
© The Au ho (s) 2025. Open Access: This a icle is dis ibu ed unde he e ms o he C ea i e Commons A ibu-
ion 4.0 In e na ional License (h ps://c ea i ecommons.o g/licenses/by/4.0/).
Open Access unding p o ided by ZBW – Leibniz In o ma ion Cen e o Economics.
Jason Fu man, Ha a d
Uni e si y, Camb idge,
MA; Pe e son Ins i u e o
In e na ional Economics,
Washing on, DC, USA.
In e economics 2025 | 3
200
Le e om Ame ica
dica ion ha his is T ump’s endgame; i could ake yea s o nego ia e, and i was poli ically
con o e sial in e en majo Eu opean expo powe houses like Ge many a decade ago.
The ascendancy o T ump o he U.S. p esidency has likely only exace ba ed he conce ns
abou doing a deal wi h he Uni ed S a es.
Ano he possibili y ha , as o his w i ing, seems o be on he ascendan – wi h he ca ea
ha i could change a any momen – is ha he p ima y U.S. demand is no o inc ease
ma ke access o Ame ican companies ope a ing in Eu ope, bu is o educe Eu opean
economic in eg a ion wi h China. In some ways, his goes wi h he g ain o he inc eased
Eu opean skep icism o economic in eg a ion wi h China. Las yea , o example, he Eu-
opean Union mi o ed Biden’s high a i s on Chinese elec ic ehicles wi h i s own e y
high a i s. Howe e , he e is a limi : Eu ope’s o al ade exposu e o China, expo s plus
impo s, was €740 billion las yea , he same o de o magni ude as he €850 billion ade
exposu e o he Uni ed S a es. Pe haps mo e impo an ly, Eu ope – o some Eu opean
coun ies – is conside ably mo e open o Chinese o eign di ec in es men han he Uni ed
S a es. And o eign di ec in es men could be he Uni ed S a es’ bigges conce n i hey
a e ying o plug he holes in i s Chinese a i egime.
No knowing wha he wan s om Eu ope is only one o T ump’s p oblems in a success ul
nego ia ion. E en mo e se ious is he asymme y. The ade wa will hu he U.S. economy
much mo e han he Eu opean economy. The eason is ha he Uni ed S a es is now in con-
lic wi h basically e e y coun y in he wo ld, while Eu ope is only acing signi ican issues
wi h i s ade wi h he Uni ed S a es. T ump’s seeming indi e ence o sho - e m pain does
help inc ease his le e age, bu massi ely o e es ima ing ha le e age would be an obs a-
cle o a deal. Eu ope’s democ a ic decision-making and T ump’s epu a ion o b eaking his
deals add u he challenges.
The unce ain y o T ump’s demands, whe he g andiose like ending he Eu opean Union and
acqui ing G eenland o mo e modes like signi ican a i educ ions, adds o he unp edic -
abili y o he si ua ion. The po en ial ou comes ange om a oken ic o y ha aligns wi h he
desi es o he U.S. business communi y and ma ke s o mo e signi ican sec o al a i s, includ-
ing pha maceu icals, and possibly e en he e u n o he O wellianly named “ ecip ocal a i s”.
I is impossible o p edic wha T ump will wan om Eu ope, and e en ha de o p edic
wha he will ge om Eu ope. Howe e , one hing is su e: ega dless o he ou come, Eu-
ope will s ill be, by T ump’s eckoning, aking ad an age o he Uni ed S a es by unning
a bila e al ade su plus o he o eseeable u u e. This means ha T ump’s ocus on and
complain s abou Eu ope will emain a isk as long as he – o any successo who sha es his
men ali y – is P esiden .
Wha should Eu ope do? Fi s , s i e o secu e a good deal. I may ge lucky wi h oken
concessions, ideally ones ha a e no e en concessions bu bene icial o i s economy.
Second, p epa e o unce ain y. E en i a good deal is eached, i may no las , and wi hou
an ag eemen , a wide ange o changes a e possible. Thi d, di e si y economic in eg a ion
wi h o he pa ne s a ound he wo ld because he Uni ed S a es is now less eliable. Finally,
and mos impo an ly, mee he challenge om he Uni ed S a es by deepening in eg a ion
wi hin Eu ope and imp o ing i s own economic policies – including ideas om he D aghi
epo , s onge demand and in es men in coun ies wi h iscal space, and e o ms and
consolida ion in coun ies wi hou i . By doing so, Eu ope could eme ge om his si ua ion
in a s onge posi ion, despi e he Uni ed S a es’ ac ions.
Wi h he co ec esponse, Eu ope could come ou o his be e o , ega dless o wha
he Uni ed S a es does. I canno say he same o he Uni ed S a es’ abili y o eco e un-
sca hed om i s massi e sel -in lic ed wound.
