EU trade deal humiliation is only the beginning of instability

European Commission president Ursula von der Leyen with US President Donald Trump and US officials in Turnberry, Scotland, July 27 2025. Picture: EVELYN HOCKSTEIGN/REUTERS

The just-concluded, but still vague and misnamed “trade deal” between the US and the EU, is widely seen, by both right and left-wing commentators in Europe, as a humiliation and capitulation to US President Donald Trump's demands.

In terms of the “deal”, the US will levy 15% tariffs on EU imports (with exceptions). In turn, the EU will grant the US “unprecedented levels of market access to the EU”, buy US arms, oil and AI chips, and invest $600bn in the country. 

This trade deal plays out the logic of the “guns-oil-oligarchs” nexus explained in my recent book with the same title, and describes the EU’s humiliation.

Guns

The EU has become the cash-cow for the US’ military industrial complex, which arose as part of a permanent war economy after World War 2. After EU Nato members recently bent over backwards for “daddy” to commit 3.5% plus 1.5% of GDP to militarisation, the EU has now committed itself further to “purchase significant amounts of US military equipment.” So much for the EU’s dreams of re-industrialising through defence spending.

The huge increase in European military expenditure that this — and the Nato agreement, which if the 3.5% commitment is met will reach $13.4-trillion by 2035 — represent, has to be seen in the light of the fact that the EU will also pick up the full bill for the war in Ukraine.

This includes not only the recent costs of US Patriot air defence systems for Ukraine, but also the bulk of the reconstruction expenditure in Ukraine over the next decade, estimated to be $486bn. The EU has already spent over €1,1bn on humanitarian aid to Ukraine. Due to the war, it has suffered from disruptions to supply chains, higher energy prices, higher interest rates and a cost-of-living crisis.

In addition, the promised accession of Ukraine to the EU will be likely to cost the EU between €110bn and €136bn, with €85bn from the Common Agricultural Policy subsidising Ukrainian farmers. These are all precious public monies that will be diverted away from productive infrastructure and social expenditure, further undermining the paltry growth in an ageing and increasingly geopolitically isolated EU.

Oil

The EU will, in terms of the trade deal, purchase $750bn in US energy over the next three years — that is, import enormous amounts of fossil fuels from the world’s newest petrostate, the US. While there is scepticism over how practical this is, the intention is obvious: the EU cannot revert to cheap Russian gas, and its energy security is now in US hands, with its decarbonisation plans in shatters. 

Oligarchs

Who benefits most? The military and oil industries are run by a handful of oligarchic firms with unprecedented and rising political power. They benefit from total world military spending that now exceeds $2.2-trillion, with the top 10 oil producers raking in $2.5-trillion in revenue in 2024. Only a dozen Western companies produce more than 80% of all arms manufactured globally.

The power of the oligarchs is such that the top 100 wealthiest Americans have nearly 60,000 times as much political power as the average person in the bottom 90% of the income distribution. The US is not a democracy; it is a plutocracy. And a plutocracy that increasingly depends on its economic growth on war and conflict — no wonder the number of state-based conflicts is the highest it has been since World War 2. 

The US is not a democracy; it is a plutocracy.
Expect more, not less, war in future — also in Africa, where the US has, since about 2008, dramatically expanded its military operations, co-ordinated by US-Africom, and accelerated its sales of weapons to African countries. In a mere 12 years after establishing US-Africom, the US has sold 10 times as much weaponry to African countries ($12bn) as during the entire 40-plus years of the Cold War. 

The easy capitulation of the EU to all of Trump’s demands, after EU leader Ursula von der Leyen was humiliated by Trump — having to fly to Scotland and wait until Trump and his son had finished their round of golf — is due to pressure from Europe’s oligarchs, and not just that its negotiators went AWOL. The oligarchs are willing to give up Europe’s sovereignty and decarbonisation ideals for the sake of their profits.

Of course, through their control of the mainstream and social media — the media moguls and techno-feudalists — they will try to convince European citizens and their governments to accept this deal, spinning it as conferring “stability” and stressing that we should be grateful the outcome was not worse than a 15% tariff.

Of course, it will not bring any stability. With Europe’s military, energy, ICT and food security increasingly outsourced to the US, in future, if Trump gets desperate, the EU will be in an even worse bargaining position. Moreover, the expanding Brics+ group is likely to copycat Trump's successful strategy in dealing with the EU.

These are all recipes for continued trade instability. No wonder Von der Leyen suffered humiliation in Beijing last week, with no Chinese officials to welcome her and being put on a bus to the venue.

This article is also published on Business Day. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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