How Von der Leyen gambled with a smile the entire EU economy on a humiliating for all Europeans 15% trade “deal” with Trump

Despite Von der Leyen et al. appearing all victorious after bowing to the Orange King last Sunday in Turnberry, Scotland, one thing is for sure, this is not a deal but a complete and utter surrender. The fact that the president of the European Commission went to Scotland to watch Trump play golf at his own golf course is so very symbolic of this undeniable EU surrender in the first place.

Actually, surrender is a very mild way to describe that it will now cost the EU companies 4-5 times more to do business with the other side of the pond + the EU has committed to invest more 750 billion dollars in energy and chips and next to that another 600 billion dollars on vague investments. The latter on its own will lead to the solid groundwork for another 1,35 trillion dollar trade deficit with the US. This is not just a surrender but rather 27 countries all together making a fool of themselves.

Did Von der Leyen have any jurisdiction to impose on all member states such an economic decadence at a golf course in Scotland? Though undoubtedly the infamous Kissinger question “Who do I call if I want to call Europe” is sadly always relevant in the EU, this time Ursula picked up the phone and was responsible for this trade pest upon the EU. As anticipated, various countries came to strongly protest this “deal” with France being adamant that the EU left its “culotte” at the Scottish golf course.

In Prospect Theory we trust

Few people can understand why the EU bowed unconditionally, not even Von der Leyen who is so very smiling in the cover photo that shows an utter lack of conscience. Kahneman and Tversky though, the 2002 Nobelists in Economics would easily pull this through with Prospect Theory. According to that revolutionary theory in Economics, in a nutshell when someone is positioned in a domain of losses, a lesser loss is considered a disproportionally larger gain and will make him gamble even more by succumbing to a greater risk-seeking behaviour. And the EU had been indeed positioned in a domain of losses as the Trump administration had already imposed 25% tariffs on EU cars and promulgated 30% tariffs as of August 1st. So, the gambler EU was losing already and suffering from that, something that made the 15% all-in concession seem like a handsome gamble to take, although it is an economic havoc for the EU. All in all, Ursula was tricked by Trump at a golf course in Scotland with a smile. Is this the level of EU leadership we deserve in the EU?

The latter is rherotical. It might be that Von der Leyen, a physician in education, doesn’t get Prospect Theory. But what about the Commission’s famous trade cabinet? Did they all skip Prospect Theory from their coursework? If not, then how is it possible to be trapped in Scotland over a complete and utter trade failure?

It is true that the EU itself is very anxious about last Sunday’s golf course “triumph” as it is rare to keep issuing multiple exlanatory follow up press releases after a trade deal. It is like the Commission puts a lot of effort to try to convince the world that when the sun goes down it is not night. Though the sun did go down in Scotland for EU trade as 15% of tariffs will make the EU businesses suffer much much more than the B.T. (Before Trump) era. Not to mention the 1.35 trillion trade deficit that the EU will shoulder by pledging to Trump to buy whatever he wants the EU to buy, from oil to chips, you name it.

Bowing to Trump but antagonizing China?

And while Von der Leyen surrendered to Trump in Scotland for absolutely no reason at all, earlier in Beijing she continued its hard stance. One of the EU’s major arguments during the EU-China Summit of last week in Beijing was that the EU “suffers” a trade deficit of 300 billion euros. But a few days after Beijing, in Scotland, von der Leyen smiled super nicely to a trade deficit with the US of 1.35 TRILLION dollars. If this is not double standards, then words have just lost their meaning.

“As our cooperation has deepened, so have imbalances”, Von der Leyen pointed the finger in Beijing, underscoring that the bilateral relations have reached an “inflection point” and that China must “come forward with real solutions.”

On the other hand, China’s Xi, said that “there are no fundamental conflicts of interest or geopolitical contradictions” and asked the EU to “properly handle differences and frictions. “It is hoped that the European side will keep the trade and investment market open and refrain from using restrictive economic and trade tools,” Xi stressed.

Though on Climate Change both the EU and China came to an agreement issuing a joint statement. The latter is so much needed given that the climate’s condition is going down the drain and we are already living the hottest months in human history. Especially now that the old pal Trump administration has left the Paris climate agreement, creating a huge peril for our planet.

EU bipolar disorder

However, it is irresponsible for the EU to have double standards in its trade, and not only trade, policy. Realizing that the EU needs China to promote the agenda against climate change, the EU agrees with China, especially since Trump wants the planet to die sooner than later, but in trade the EU transforms into something completely different, antagonizing China which is the EU’s second largest trade partner and but-kissing Trump who is taxing with 15% all EU products + 1.35 billion dollars on very vague investments and so on. If this is not bipolar disorder in foreign affairs policy, then what is the name for it?

The EU on the other hand needs to be consistent. Partnering with China only in matters that it finds “innocuous” like Climate Change and posing various trade limitations mainly because they will potentially and very vaguely look sexier to the US is definitely not the right way forward, especially at a time that all EU companies will be suffering, at least for the next 3.5 years, from 15% taxes and 1,35 billion dollar trade deficits. Someone in the EU needs at some point to see the bigger picture here from far above: what happens to your economy if you are having a bully as biggest trade partner, US, that is ripping you off and at the same time you continuously undermine trade with your second largest trade partner? “It’s the economy, stupid!”

This is definitely not fruitful EU policy making, especially at a moment that France officially enters austerity, VW doesn’t need its German factories any more and so on and so forth. In short, EU leaders should coordinate for the good of the EU instead of doing anything possible to maintain their handsome chairs, having a false belief that allowing to be tricked by Trump and take smily photos with him will let them stay in power a bit longer.

That is not EU, that is YOU.