Many are surprised that the EU Commission has achieved so little in its trade talks with the US. People everywhere are complaining that the EU should have been more courageous and threatened countermeasures. How could it have been allowed to happen that the Americans imposed tariffs and the Europeans simply did nothing? Are Europeans just cowards?

Anyone who thinks this way knows nothing about international trade and is judging as if both sides were simply meeting on equal terms. That is a mistake; there is no question of both sides being on an equal footing. However, this is not only due to the sheer power of the Americans, but also to the logic of the matter. One only has to compare the two documents published by both sides to see this. The magic word is ‘balanced trade’. The American fact sheet states: ‘The United States and the European Union have concluded a cooperation agreement on reciprocal, fair and balanced trade.’

The European counter-document states: ‘On 27 July 2025, European Commission President Ursula von der Leyen and US President Donald J. Trump agreed on an agreement on tariffs and trade.’ There is no mention of balanced and fair trade. Because the discrepancy between the documents is so obvious, I can tell you exactly how the negotiations went. I wasn’t there, but logic tells us how it must have been.

The American delegation enters the negotiating room and throws a picture on the wall showing the current account balances of the US and Europe. The US has huge deficits, Europe has large surpluses. The American negotiator says: It’s very simple: we have deficits, you have surpluses. We want balanced trade (he uses the exact words ‘balanced trade’), but what do you want?

Ursula von der Leyen stares at her speaking notes but can’t find an answer. Yes, what do the Europeans want? Should she now say that the Europeans want to have surpluses for another hundred years? What can be said against ‘balanced trade’? Aren’t the Europeans themselves trying to achieve balanced trade in the monetary union? Aren’t there even procedures and accusations against countries that consistently have excessive surpluses? Perhaps the Americans know this.

Before the Commission President can open her mouth, the American says: As intelligent people and good economists, we surely agree that mercantilism, the attempt by countries and regions to enrich themselves through permanent trade surpluses at the expense of their trading partners, belongs in the dustbin of history. We have known this for 300 years. That hits home.

The Commission President still hasn’t said a word, but now she pulls herself together and stammers: ‘But please, not 30 per cent. 15 per cent isn’t bad if we make an effort to accommodate our American friends in other areas.’ ‘Fine,’ says the American, ‘let’s say 15 per cent, a few hundred billion in direct investments, a few hundred billion more in energy imports, and it’s a done deal.’

The Commission President politely thanks him for this generous gesture between friends and asks him to convey her best wishes to dear Donald. The Americans leave the room, grinning and saying that it has never been so easy to leave the Europeans speechless.

I fear that even after this lesson, most Europeans will still not understand what the hour has struck. They think mercantilism is a word used to insult those who oppose free trade. But the US-position is valid: only balanced trade can be fair trade. Those who constantly run surpluses are undoubtedly the culprits.

Incidentally, the Swiss president fared just as badly as the Commission president. She too believed she was well prepared for a phone call with Donald Trump and was given the cold shoulder. Europeans, in their surplus mania, fail to understand that they have no argument against the American accusation of mercantilism. You cannot simply stand up to a powerful partner and say: we want surpluses because we have always had surpluses.

To avoid the tariffs, the surplus countries should have joined forces and offered the Americans a way to reduce the surpluses in a manner that would be positive for both sides, namely through more growth in the surplus countries (as shown here). However, all of the administrations involved clearly lack the relevant economic expertise to develop such a strategy.