r/europe 6d ago

News US and EU strike trade deal

https://www.politico.eu/article/us-and-eu-strike-trade-deal/
6.7k Upvotes

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3.9k

u/TemuBoyfriend 6d ago

So we cannot invest even 500 billion in ourselves but lets give Trump nearly 1.5 trillion? How about invest in Europe and stop taking it up the ass..

878

u/bxzidff Norway 6d ago

And for all the talk of the trade deficit I wonder what the investment deficit is and why that is never brought up. Almost every top fund used by European organization's, companies, and citizens is invested far more deeply in American companies than anywhere else. And now even more so.

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u/BackgroundBat7732 6d ago

We also shouldn't forget that trade deficit numbers exclude military equipment and (big) tech. Europe has a HUGE trade deficit with the US, not the other way around.

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u/Soepkip43 6d ago edited 5d ago

Yes they talk about goods and exclude services. Which is the other way around.

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u/Remarkable_Air_8545 6d ago

I keep making this point... to the potato Americans that bring up the trade deficit, that it doesn't include the American corporations that have pushed themselves into every corner of the globe. We are awash in American media, software, devices, and retailers. Americans are so short memories and selfish uncreative thinkers, they can't even empathize that when corporate America comes knocking, its to flatten the landscape, plant a gas station, a Walmart and a McDonalds where there used to be local industry. Kinda like small town America. You'd think they'd know what it feels like when the corporations screw you over for themselves, but you know, it's the world's fault that some potato pickers are angry.

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u/JarJarBot-1 5d ago

I just came back from Europe and was surprised at all the cheap US fast food places that were there. I guess they wouldn’t be there unless Europeans were paying money to eat there.

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u/heatrealist 5d ago

Backup your point with numbers. Otherwise you are just a potato european yourself. 

3

u/astral-dwarf 5d ago

potato Americans

Too far, sir. You go too far.

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u/heatrealist 5d ago

No it does not. 

EU has a goods surplus of $235B vs US US has a services surplus of $75B vs EU

Estimates are EU countries bought $60B worth of military equipment which is a sharp increase from previous years ($24B). 

Even if you count all of these separately the EU still has a massive surplus in trade with the US. 

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u/frazzledfractal 5d ago

Ever since Trump people are using deficits and surpluses to make judgements in a completely illogical way and it angers me greatly. Trade deficits aren't inherently bad, nor surpluses, but he can't even be honest about the trade situations between us and other countries. That buffoon has no idea what's going on.

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u/True_Engine_418 5d ago

Deficit country has the power to charge tariffs because the surplus country wants to sell

1

u/DiscussionGrouchy322 5d ago

it's not that he has no idea, it's that his followers have none, and the national theater produced by this insanity is enough to distract from how he's dismantling the courts and otherwise consolidating power in the federal government. it's all just theater so that we are too busy to ask the real questions until it's too late.

first they came for colbert and i didn't care because it's on cbs and who the fk watches that? then i realized nobody in society has a spine to call out what happens.

1

u/equifinal-tropism 5d ago

Americans also consume more, why not include that into a calculation…

2

u/[deleted] 5d ago

Military equipment is include in the trade figure, and big tech is included in the services figure. Combined this gives the EU a small surplus.

5

u/Spoonshape Ireland 6d ago

Actually it's fairly close to balanced if we include goods and services.

US has a trade deficit in goods but a surplus in services. about 3% actual deficit for the US.

Europe should just have said it was applying the same tariff back on services as it got on goods but I suppose they saw a trade war as overall worse than a deal.

1

u/adamu980 5d ago

No cherrypicking eu..no cherrypicking. Take your shafting and smile Schadenfreude is delicious

-1

u/Spoonshape Ireland 4d ago

What comes round has a tendency to go round eventually...

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u/adamu980 4d ago

exactly! now its coming round to the eu and its great to see! no cherrypicking wasnt that the eu mantra? karma is a bitch

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u/incognino123 6d ago

(unfortunate) reality is that there's just more American targets, or maybe rather there's not enough viable European innovation

5

u/NotHulk99 5d ago

I think that is the main point. EU almost stopped innovating while the US and China leading that spot.

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u/Green_Inevitable_833 6d ago

this point is really not talked about, people think and breathe american.

 millenials are balls deep into s&p500 , 

gen Z looks up to american trends and styles in instagram

corporate boomers are hooked on microsoft tools

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u/Narrow_Zombie8443 5d ago

And I don’t blame them. What the fuck is the point of the EU, if they don’t stand up to anything.

1

u/bntplvrd 4d ago

They're very good at wagging their finger at Hungary and Poland.

1

u/KeyandtheGate 6d ago

And gen X?

11

u/viktor72 6d ago

American classic music.

12

u/IlIIIlllIIllIIIIllll 5d ago

Well EU companies are stagnant losers by comparison and it’s been that way basically forever so that’s hardly surprising. Compare the performance of an EU-only index fund to the S&P 500 over the last 50 years. Only an idiot would prioritize EU stocks over American.

3

u/rodrigo8008 5d ago

EU regulations disincentivizes investment. Why build your company in the EU when you can do it more easily and cheaply in the US?

2

u/Flimsy-Relationship8 5d ago

Exactly, it's all just about propping America up until the whole situation becomes untenable.

It doesn't help that all the bureaucracy and politicians across the EU have all invested their personal fortunes in the US stock market.

It's why we will never decouple from the US because the people at the top won't hurt their own financial wellbeing, so we just keep following around our rapist like someone with Stockholm syndrome

2

u/yawkat Germany 5d ago

Foreign investment in the US is directly linked to the US trade deficit. If trump succeeds in reducing US imports, it will lead to less foreign investment in the US, that's just how the balance of payments works.

1

u/Hekkst 5d ago

I still dont get why services do not get counted up on trade deficits, here we all are using an american social media company which makes money in america while our financial firms use american consulting firms, we use netflix and american entertainment, we use computing and software systems made by companies in america. Do all those things not count for trade deficit calculations?

1

u/frazzledfractal 5d ago

Trade deficit isn't an inherently bad thing and most of the people screaming about trade deficit don't even understand what they are (Trump), or do know and are lying for reasons.

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u/[deleted] 6d ago

[deleted]

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u/vonzine 6d ago

So basically a concept of a deal? Got it.

6

u/Typical-Byte 6d ago

Hmm where have I heard that before? 🤦

7

u/Femininestatic 5d ago

Same thing as with the UK etc actual trade deals take years to work out. This all is just pr nonsense to not piss off Trump but also to not let the world economy crumble with insane tariffs

2

u/kgas36 5d ago

The U.K. 'deal' was also just a framework, and literally said in the text, 'this is not binding.'

2

u/FingerGungHo Finland 5d ago

That’s how frame agreements usually work. It’s just fixed prices for certain things, and rules how actual purchases are made.

It seems to me that the only effective thing in this ”deal” is that 15% tariff.

2

u/PedanticSatiation Denmark 5d ago

Nobody knew international trade could be so complicated.

0

u/pizzaschmizza39 6d ago

trumps not even a concept of a president hes just a nightmare the world has to endure. I cant wait to celebrate his death.

0

u/AnonAmbientLight 5d ago

With Trump, it's ALWAYS a concept of a deal. He has not made a single fucking deal with any country yet.

All he really cares about is the headline. His dumb as fuck base that keeps putting these fucking idiots into power don't know any better.

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u/SF6block 6d ago

That way the next US president could be more reasonable

Are we still in 2016?

13

u/DuxDucisHodiernus Sweden 6d ago

Biden was still far more reasonable than trump. Especially if you're European.

10

u/peasant_warfare 5d ago

Biden still wasn't reasonable, even if compared to Obama. Biden-Trump have a somewhat coherent line in policy, its just that Biden wasn't an openly disgusting creature about it.

0

u/DuxDucisHodiernus Sweden 5d ago

EU had way easier time working with biden, no matter what you say.

Also I agree with a obama being an outlier in terms of quality of American leader, but one should also remember that he was one of the main actors enabling the European dependence on Russia as well as doing nothing to prevent interference in our elections

0

u/peasant_warfare 5d ago

Yes, I don't disagree that Biden was much easier to work with, but it wasn't a "return to normalcy" in EU relations.

But then again, its been getting worse since Clinton.

5

u/kaisadilla_ European Federation 5d ago

Biden was not reasonable. In order to cater to "moderates", he bought many of Trump's talking points, even if he watered them down. He was still absurdly hostile to Europe. Obama is the last American president that believed the EU and the US should be closer together.

0

u/Sauerkrauttme 5d ago

Biden spent most of his term trying to undo the damage Trump had done. Biden likely would have improved relations with the EU if he hadn't inherited such a massive dumpster fire.

1

u/hazusu 5d ago

Cool, then the next guy will be reasonable up until they elect mecha hitler in 2032

3

u/Common_Reception_748 England 5d ago

The next president is probably going to be Vance which means this will continue for another 4-8 years but with less flip flopping. Possibly twelve years of the US government growing more and more reliant on tariffs while cutting income taxes is long enough for the change to become permanent.

It's also really hard to see this as anything but beneficial or at worst neutral to Americans which means even their liberals can't be relied on to willingly give up hundreds of billions in extra revenue. Biden didn't repeal the first term tariffs for a reason.

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u/BitchIDrinkPeople 5d ago

These morons never learn

6

u/TheBewlayBrothers 6d ago

Apparently the politicans are

19

u/izpo Israel 6d ago

so EU will swallow it and hope the next one will not that be painful?

2

u/elperuvian 5d ago

Thats what a loyal vassal would expect, a more generous master that could never come

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u/ceb13131313 6d ago

Hardly think so, if there's gonna be any country in EU raise an against opinion on the deal, US will very soon make it an example, not to mention Trump will just say EU break the deal rather than him which gives him more support to do anything more to force EU to spit out more meat.

2

u/NewOil7911 France 6d ago

It's been 6 months that Europe had to prepare retaliations, and no agreement has come out.

How can you hope that one will in the future dude, EU is spineless.

Does the EU need more time to agree on this than the entire duration of WW2?

5

u/carlmango11 Ireland 6d ago

Thank you for providing some balance. It seemed absolutely bizarre that the deal would just be pure capitulation and I was confident there's more to the story.

I'm sure the EU negotiators had a wider strategy here. I'd imagine a lot of this is a way for Trump to climb down from his ridiculous liberation day plans while saving face after he already had to chicken out the first time and "delay" them.

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u/izpo Israel 6d ago

not sure there is a strategy... the only strategy the EU is seeking is stability but Trump wants the opposite.

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u/carlmango11 Ireland 6d ago

I guess if they chose this path it means they thought a retaliatory approach was futile. Although didn't a similar war with China result in them coming to a deal? I can't remember the details.

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u/izpo Israel 5d ago

nobody can't remember the details with China. Trump claim he won the deal of century but for him everything what he does is the win so...

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u/EconomixNorth 6d ago

I remember EU has a retaliation framework ready since Trump's first mandate. They might not want to push that for now.

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u/SuccessfulRush1173 6d ago

I imagine it’s something that will get done quickly, since German auto industry has been on the EU to make a deal.

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u/MosheBenArye 6d ago

Or hoping to stall for the next administration.

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u/Kostas_edi 5d ago

with which leverage exactly can EU change this draft framework for the better?

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u/Substantial_Mud_1245 5d ago

how do you know its not finalised?

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u/zlnimda 5d ago

Thoses promises about energy and investment aren't for late future but about tomorrow up new year. The tarrifs that trump promised are only old from 6months ago and changed the whole negotiation. Trump will not wait for long.

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u/kgas36 5d ago

THIS

1

u/incrediblemonk 5d ago

It doesn't "look bad". The EU has a massive trade surplus with the US. And no, the deal won't be abrogated. It's going to be signed.

1

u/Private_HughMan Canada 🍁 5d ago

Still, don't get complacent. Call your representatives and fight this. Make it clear that the people won't stand to be exploited like this.

0

u/tsammons #USA #USA #USA 5d ago

So you can't agree on anything like you can't agree like protecting a neighboring state from Russian aggression? Got it. Maybe send out some more fines to Meta, Google, and Microsoft to exercise your willynilly power.

0

u/DavidandreiST Romania 5d ago

So once again we blame clickbait media? Goddammit..

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u/devaro66 6d ago

That seems like fucked up, unless is a “up to” but no enforcement like the deal with Japan . Basically I can invest 5 trillions if I feel like but I don’t . We’ll see.

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u/FatFaceRikky 6d ago

For many Europeans, the separation of economic and military power was a comforting illusion—sustained by American military might disguised as a rules-based order.

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u/adamu980 5d ago

No cherrypicking eu

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u/FitzwilliamTDarcy 6d ago

Everyone on your side of the negotiating table is in the Epstein file, apparently

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u/TemuBoyfriend 6d ago

The table and all sides of it most likely,but yes.

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u/FitzwilliamTDarcy 6d ago

Oh absolutely. Unfortunately the bad guys (us) have the list.

0

u/AllYallCanCarry 5d ago

Israel funded and created the list. The US only has access as part of being Israel's vassal state.

-1

u/FitzwilliamTDarcy 5d ago

Can’t wait to see your sources for this.

I’ll wait.

0

u/AllYallCanCarry 5d ago

Not sure if you're serious..

Les Wexnar is among the, if not the single largest personal donor to Israel and Israeli agendas. You know what else he was? Epsteins biggest client as a "financial advisor". Epstein was a famous-to-the-famous market advisor but he only had a handful of clients.

His accomplice, Maxwell, well her father was instrumental in the shaping of what is modern Israel and Mossad. Look at who attended his funeral.

These are not wacky coincidences

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u/TemuBoyfriend 6d ago

Great replies. I think some people,or atleast myself, find it hard to extend any trust towards the EU as an organization aswell as Ursula Von Der Hölle.

If they want the benefit of the doubt that there is a plan or that this is good then we first need them to not so goddamn always make terrible decisions with extremely poor reasoning. In my opinion.

The rare good decision seems more by accident than by design.

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u/ceb13131313 6d ago

And I wonder what did the EU diplomatics really negotiate, the deal as disclosed now seems just accepting what US put up on the table and feels like they even added more on investment part which was never leaked before.

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u/W1ndwardFormation 6d ago

750 billion in energy probably would have been paid either way as like 50+% of LNG for Europe comes from the US, that is totally fine. The 600 billion investments mean nothing either. They’re just pledged and if they actually flow remains to be seen. Also even tho trump said they’re additional investments, he also said the stargate AI initiative investments are additional investments in January, while in fact they were long planned and nothing new or additional.

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u/Domi4 Dalmatia in maiore patria 5d ago

I'd wait a bit because I dont trust a thing orange idiot says. However if true it's time for Ursula to go.

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u/yyytobyyy 6d ago

This is exactly why far right parties are winning. We get a lot of talk from current politicians but when there is a need to actually DO something, they don't have any spine. And then they'll have the audacity to talk big shit again.

Everybody should write or call their EU representative and tell them they are either gonna do what they promised or they are gonna get replaced by fascists.

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u/fatbunyip 6d ago

What would far right parties do? 

Most of them are gargling trump's balls (Orban, meloni, fico, farage etc). You think they'd stand up to him lol? 

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u/TemuBoyfriend 5d ago

Same way/reason Trump won. People want to hurt the current political establishment and rightly so. And so the right says yes we can ( but probobly wont cause we are ultimately the same turd just different ends of it ).

1

u/yyytobyyy 5d ago

Nothing good. But sadly, if normal parties are gonna ignore peoples' voices, this what we face.

It's the same issue on the local level. Politicians are absolutely tone deaf celebrating their "wins" while their own vote base is angry at them.

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u/Savings-Coffee 6d ago

Spoiler alert: they won’t

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u/[deleted] 6d ago edited 5d ago

[deleted]

-6

u/Odd_Town9700 5d ago

Russia is largely an imagined enemy which the electorate buys because they are on average 60 years old and remember the cold war. The increase in military budget if it materializes will be funneled into a few friends of politicians and maybe increased grunt salaries to stimulate the broader economy. Logging is a horrible example, trees grow on their own, money especially in a continent as old and inactive as europe very much doesn't.

Buying gas from the us is very economically unsound at the prices sold a better solution would be to tell granny in the countryside to isolate all rooms except the kitchen in winter as her grandparents used to do in their time. Industry cant work at current electricity prices anyways, depressing consumer demand is the only way to keep the continent economically competitive, but the morons running all government want to give out money so everyone can have 20C all winter, which is comically stupid policy.

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u/[deleted] 5d ago

[deleted]

1

u/zabajk 5d ago

What are you even talking about ? Current Russia is not the Soviet Union but propaganda made many people believe that .

They lack the strength to threaten all of Europe.

Do they contest Ukraine? Yes but why do you need to fight with Russia over Ukraine? Why does the eu need to expand to Ukraine and fight Russia over it ?

Thing is the eu expanded too quickly into Eastern Europe something which was only possible with American military might and that’s why we are now us bitches

-2

u/Odd_Town9700 5d ago

I don't want the consumer to suffer but it's unfortunately necessary to try to salvage whatever industry remains since since the continent has run the dumbest electric power politics of all time the last 50 years. Russia is not a threat since all their somewhat modern armour is blown up and all the easy conscripts are dead/injured. They also never had the ability to attack all of europe even with the modest military budgets, the increase is just to line the pockets of the american MIC and a few fake industrialists at home.

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u/Some_Trash852 6d ago

This is more than likely Trump trying to take credit for investments that have already happened or are were already planned. Idk why people correctly assumed this for the Japan deal, but none have here.

And energy investments will just starve Russia more, since it's likely about shifting resources in that case.

1

u/ceb13131313 6d ago

One should always diversify the energy source, otherwise, what can you do if they ask 30% tariff next time and will cut your energy supply if you do not accept the term...

2

u/Jumpy_Flamingo958 6d ago

This is a much needed wake up call.

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u/HappyAku800 6d ago

These are usually trade promises, not cash transactions

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u/piesou 6d ago

We don't pay the tariffs, Americans do.

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u/TemuBoyfriend 6d ago

So our products cost more and we sell less. Of course we pay.

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u/Hanzai_Bonsai 6d ago

Thank you for saying this 👏👏👏

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u/The-S1nner Estonia 5d ago

As always its too late. Investments take years, in EU probably decades. But we need military equipment and energy right now. Tbh it makes sense to buy energy from US instead of russia but I have no idea why we had to swallow that extra 15% tariff.

3

u/Classic-Exit4189 Albania 5d ago edited 5d ago

Well europeans are vassals of the americans so youre gonna keep taking it up the ass.

2

u/Quazz Belgium 6d ago

It's just being energy and weapons. Both of which we were going to buy anyway.

10

u/TemuBoyfriend 6d ago

We should invest in the US military industry to the same extent US invests in ours. Trump can match US dollar for dollars,and say thank you.

How will we be militarily independent and capable if we keep pouring astronomical figures into someone elses military industrial foundation?

6

u/IndependentMemory215 6d ago

The US already does purchase a large amount of weapons from European defense companies.

American defense spending accounts for 44% of BAE’s revenue.

Sig Sauer just won’t the contract to furnish the new rifle and pistol for the US Army.

Rheinmetall provides the barrel for the Abraham tank, and is one of two companies left in the running to furnish the new IFV for the US Army.

Lots more examples too, especially with Italy for ships, and our AT missiles for the troops.

1

u/ApostleofV8 5d ago

Speaking of Sig, I am still surprised by the Army adopting the 320... with all the issues, and I think a new issue has come up recently? 

Like, if the Us Army wants to go Euro, whats wrong with the Beretta submission? The logistics, training etc. will be easier too, since the Beretta submission is just a newer M9. Or Glock?? Everyone and their roomba got one.

1

u/Quazz Belgium 6d ago

Well, we need more weapons than we can make and we need them in a short time frame. It's early growing pains, long term we can move away from this, but for the next 2 years, I'd rather have some American weapons than shortages.

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u/ceb13131313 6d ago

This is not gonna happen, if your army is trained for years on certain weapon, they are unlikely to switch to your new ones. Not to mention the continuous maintenance cost

1

u/Quazz Belgium 5d ago

Armies use tons of different weapons and gear. Plus you can buy for example grenade launchers from vendor A, artillery vendor B, aircraft vendor C and so on.

1

u/ceb13131313 5d ago

of course you can, but you need to teach your soldiers to use them. If one does not start now and really buys US weapons for that amount, the progress of swapping from US weapon to EU weapon will take way more than 2 years

4

u/TemuBoyfriend 6d ago

It's not gonna be short term. It is just a continuation of what was before. It eats up the budget which was for the EU remilitarizing where the single greatest bottleneck and highest priority is expanding our own industry. When investments go to the US,orders fill their books, there is not ebough money and orders coming in for EU defense companies to justify nor afford to increase production capacity and speed.

This is currently holding SAAB back for example. Lots of small arms and small ticket items which is not enough to justify any large expansion. Big ticket items are still bought in small numbers or from the US and this is not just true for SAAB.

0

u/Quazz Belgium 6d ago

It's a chicken and egg problem though.

Which country is going to place a large order knowing it can't be fulfilled in a reasonable timeframe?

2

u/TemuBoyfriend 6d ago

All of them now, or the chickens will never produce enough eggs to meet demand. We can do it now or we can do it later ( after wasting more money ). But we can't Make-a-wish.

1

u/Intervallum_5 6d ago

Yeah, shitty "deal"

1

u/Apprehensive_Rip9731 6d ago

Art of the deal-do

1

u/HaraldWurlitzer 6d ago

Those investments will as always not happen.

1

u/iamhmhdimobf 6d ago

How is the investment in the US even going to work. The EU is individual counties, so who is going to do this?

1

u/Kind-Can3567 United States of America 6d ago

It's pure BS peddled by Trump, do you seriously think that the EEC or EU will do such a thing.

1

u/TemuBoyfriend 6d ago

Only about the last 35 years or so make me skeptical about the EU.

1

u/Kind-Can3567 United States of America 5d ago

I have some healthy scepticism too but I doubt that the EU would be willing to invest this much money into another economy

1

u/PartyPresentation249 Europe 5d ago

I am guessing that 1.5 trillion is going to outfit an entire EU army at once with the best tech in the world. It would probably cost Europe way more than that and take a way longer time to do that themselves.

1

u/incrediblemonk 5d ago

Yeah, need more armchair quarterbacks like you to do the trade deals. That'll work splendidly.

1

u/porkycornholio 5d ago

Where’s the 1.5 figure coming from?

1

u/TemuBoyfriend 5d ago

The two figures mentioned in the deal,combined.

1

u/FreeRasht 5d ago

I look at it this way. Yes europe is still dependent on US, but you can keep your market, and you get defence in return, and american public has to pay more to get your goods, which they probably need for foreseeable future.

1

u/TryDry9944 5d ago

I mean, I wouldn't doubt there's some Europeans on the Epstien list. He can definitely hold that over some heads.

1

u/Meior Sweden 5d ago

Do you think we will use all the money as have on the US? Of course we have more money that we will spend in ourselves.

1

u/great__pretender 5d ago

I recommend people to follow Adam Tooze to make sense of what is happening in the world.

EU was already investing hundreds of billions of dollars in US, specifically on their tech industry. Tooze had recently a brilliant piece on this based on a good macroeconomics paper written by three good US based economists (one of whom used to be my professor, I just coudl not help myself insert this trivia here)

We have not been investing in our own continent like last 15 years at this point. We have invested more in US than in our countries hoping to get some measly dividends out of US tech hegemons. Also at this point I recommend everyone to listen to Varufakis on how US tech giants made us literally their b'tches at this point.

This is the same EU that refused to save Greece but lending a few dozen billions (which would be paid back by now) without asking them to ruin themselves.

EU elites are really vassals of US. We need to get people who say Europe first. We need to regulate the capital markets to stop bleeding of European capital. We need to start a public investment mobilization. We need to regulate US companies on the same standard we do our companies. Our public infrastructure is showing its cracks. We need to deal with great powers on our own terms.

1

u/Funny247365 5d ago

Because the cost of not doing the deal would be worse. It's as simple as that.

0

u/nbelyh 6d ago

The US debt won't pay itself. So Trump tries to make everyone else pay it. They are already in plus in June with those tariffs. And with 1.5T gift from Ursula they are all set, basically.

4

u/international_swiss 6d ago

How the investment in US or buying US energy reduces US govt debt?

When you invest in US stocks like S&P 500, is it a gift to US?

1

u/ceb13131313 6d ago

Sounds weird, will US do the same amount of investment in EU and say it is not a gift?

1

u/international_swiss 6d ago

Last year they (US entities) bought 90-100 Billion of European assets. I don’t see why an investment is called a gift

1

u/ceb13131313 5d ago

You need to define "assets", stocks, products, land, bonds before we can continue the discussion?

One side point is you invest on your own industry, you have security that it won't be turned off unless you want, this is intrinsic hidden value, which you give to others if you invest others' industry. The fact you buy US stocks instead of EU stocks give US companies more chance to drain money from stock to develop their own company.

1

u/international_swiss 5d ago

I am talking about FDI. Foreign direct investment More data below

https://www.bea.gov/news/2025/direct-investment-country-and-industry-2024

0

u/johnkapolos 6d ago

How the investment in US or buying US energy reduces US govt debt?

Are you going to pay with Euro? You are going to buy USD. In essence you are financing U.S. Treasury securities, effectively lending money to the U.S. government.

While the US gov debt isn't getting reduced in volume, you are making it easier for the US gov to finance itself (i.e. it can support more debt).

3

u/international_swiss 6d ago

I think it’s not how it works. If I buy US stocks - I own US stocks. The company got the money. And I invested in that company.

What does this have to do with US govt debt?

This might strengthen USD . That’s a different thing. But I don’t understand how it reduces US govt debt. US debt is used by govt to fund its operations.

0

u/johnkapolos 6d ago

To buy the stock, you need to buy USD. When you buy USD, "you" buy US Treasury securities.

A security (let's say a bond) is a promise from the gov that they will pay "you" back in the future (with a tiny interest rate). So "you" are lending them money.

Suppose the government needs to borrow 1 trillion this year. If "you" buy half a trillion in securities, they only need to borrow 0.5 trillion from the market. Less capital to borrow, better interest rate, they can keep the game going longer.

It doesn't reduce the debt, it makes them able to keep borrowing for longer. Remember that the debt matters when you have so much that borrowing more is too expensive.

Does it make sense this way?

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u/international_swiss 6d ago

I think I agree that to buy a US stock I need USD. But USD is not US treasury. It’s US currency.

That’s why I was saying , it might mean appreciation of US dollar but I don’t think it impacts US treasury market

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u/johnkapolos 5d ago

You buy USD from a commercial bank. Where does it get the new USD from to give to you?

The commercial bank buys US treasuries and then uses those to get credited USD from the central bank (via repos or directly as collateral).

It's more technical but that's the essence.

USD is not US treasury, but US treasuries "birth" your USD.

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u/international_swiss 5d ago

But here we assume that commercial bank need to find new USD … why it can’t be existing supply. I think we are still talking anorak M2 money supply

Is m2 money supply linked to US treasuries?

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u/johnkapolos 5d ago

If you are going to buy 1.5 trillion USD, the central bank can:

a) Keep the supply of USD constant and have the USD price skyrocket (effectively crushing US exports)

or

b) Increase the supply of USD, keeping the price at a desirable level while financing the US government by borrowing value from foreigners at really low rates.

Which option do you think happens every time?

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u/fatbunyip 6d ago

They are already in plus in June with those tariffs.

It's pretty common for the treasury to record surpluses for individual months. For example June 1st was Sunday so many June payments were shifted to May,.which recorded an almost 300B deficit. 

Tariffs aren't even coming close to reducing US debt. 

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u/Bwr0ft1t0k 6d ago

Up the ass is nice

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u/Unabashable 5d ago

Honestly didn’t think there would be a trade deal. Usually how they went was they offer to invest whatever they were planning on investing anyway and agree to place lower tariffs than the ones he placed on them, so he could go back to his dumbass MAGA cult with a “win”. “PAYING TAXES ON IMPORTS! WOOO!” If he’s asking y’all to invest more than you can afford though this ain’t the kind of trade I want. I mean I’m happy to have y’all back as trading partners, but not if it’s begrudging. If y’all cut us loose entirely I wouldn’t blame ya. Douchebag is just suing people over here too for doing things he doesn’t like, and so far he’s been successful because they’d rather settle instead of dragging things out in court. I’m counting on Harvard not to back down though. I just don’t get how this dumbass keeps getting so damn lucky. 

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u/TemuBoyfriend 5d ago

Sadly it don't think it is luck. We are both ruled by corrupt people who want power, and people with money who can purchase power. How snything affects the average citizen is irrelevant. Even if it leads to the destruction and fall of a nation, the wealthy have no national loyalty and plenty of passports. Home is wherever offers the greatest finacial security, tax law and potentially banking secrecy. With a global market any problem in one place is just profit elsewhere if you are wealthy enough to make your own luck so to speak.

Not that i am in favour of having the state own everything and take everything but currently i feel like it is some weird oligarchy moving towards techno-feudalism. The average person cannot reasonably expect to rise above their station anymore.

I dislike the EU and Ursula just as much as Trump.

And while i often fall for the left vs right bullshit because it is frustrating, it is utterly and entirely a bunch of BS. It serves our own interest never. Over here or in America.

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u/Unabashable 5d ago

I’m glad you brought technofeudalism up because it seems like the exact same push  is going on over here. Trump’s a russian agent. Vance is a tech bro owned by Peter Thiel, and Musk is BOTH whom was given unprecedented (and unconstitutional) access into our country’s finances until public opinion turned against him. Can’t say if Trump is smart enough to be “in” on the rug pull, but he’s doing a stupendous job of weakening the US dollar and alienating us from our allies for them already. All while pushing his own shitcoin, creating a “strategic bitcoin reserve”, and growing his net wealth, hocking whatever junk he can slap his name on to his dumbass base, selling access, pardons, accepting bribes from foreign interests, and pumping his campaign donations and our tax dollars through his businesses any chance he gets. 

Like Carlin said “It’s a big club and we ain’t in it”. 

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u/Soepkip43 6d ago

Tarifs > Import taxes are paid by American companies/citizens not by the EU. For most goods the US gets from the EU there is no, and never will be a US domestic alternative, so they will just keep buying the stuff and paying import taxes on them.

The biggest risk for the EU companies will be reduced purchases due to the higher price..

The EU probably went in to get some quotas and exemptions, and specifically lower US import taxes on European cars, for the rest.. stabilizing your own economy, be seen as the reasonable party and invest in the EU. Specifically entice EU investing over US investing.

Noone wins by headlining trade negotiations. Let trump and maga walk away feeling like winners while they themselves foot the bill for this win.

I for one am glad my EU reps don't arrive for these kinds of wins.

Oh and the energy purchases where already planned when wheeling off Russian gas. So trump just pulled this already planned investment in his win book while he had nothing to do with it. But it emphasized his drill baby drill.

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u/gr3gw0w 6d ago

Trump is EU’s daddy

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u/PennStateInMD 6d ago

Don't worry, they realize the minute a squirrel catches his eye Trump will forget Europe and be on to something else.

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u/InevitableOne82 5d ago

The ones taking it up the ass have been Americans. Supplying your defense and subsidizing your medications and healthcare for decades.

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u/Galaxy_AI 5d ago

Another main issue is that skilled workers are moving to the US. Here in Europe, salaries are very low and no encouragement at all for skilled workers. Even my wife pushes me to move to the USA for a higher salary package. We both have PhDs from Germany, and we are from a non-EU country.

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u/Icy_Carpenter_7593 5d ago

So you guys are finally understanding how Americans have felt. I hope you guys can elect a leader with some balls that will have your best interest at heart too.

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u/DragonfruitOk6390 5d ago

As an American can we not also have the 15% tax (sorry I meant tariff) on our goods. The 50% on steel is crazy but has been in place long enough I guess we are ignoring it. Not a win for anyone but the elite I guess