'Projection of weakness': UCC academic says EU deal with America is ‘a capitulation’

A UCC academic has described the European Union’s trade deal with the United States as “a capitulation” and warned that it will cause long-term negative results across the EU.

The deal, which was agreed on Sunday by European Commission president Ursula von der Leyen with US president Donald Trump in the ballroom of his Turnberry golf course in Scotland, committed to 15% tariffs on most EU exports to the US.

Despite trebling previous tariffs on goods to the US, which had averaged 4.8%, the agreement has been presented by the commission as the best deal available, avoiding the 30% tariffs threatened by Mr Trump, and preventing an economically devastating trade war.

Despite this, John O’Brien, an academic on financial markets and investments, working in the Department of Accounting and Finance at UCC, said the commission, and Ms von der Leyen, had “capitulated” to the US.

“The deal will negatively affect growth,” said Mr O’Brien, who previously worked as an investment manager in London.

“In the short term this is a better outcome than a trade war. However, the projection of weakness by the EU, surrendering to economic threats and accepting a one-sided deal, will be noted globally with long term negative results.

“China and Russia will be particularly interested in this weakness.”

Financial markets had reacted by selling the Euro, he said, signalling an expectation of lower growth across the EU, while stock exchanges across the EU had also fallen. “The supposed benefit of certainty is overstated. The current deal is a political agreement between the US and the EU Commission, and there are many failure points before a deal is signed,” Mr O’Brien said.

“Both France and Germany have criticised the deal and it may not get the necessary support from EU governments. Having conceded once to Trump there is no guarantee that he will not come back for more having sensed weakness.

“Businessess planning on the basis of ‘15% and done’ may be surprised before the end of the year.”

He added that several far-right parties, including National Rally, Alternative for Deutschland, and Victor Orban’s Fidesz in Hungary, all of which would normally be seen as Trump supporters, have criticised the deal.

“Although they are focusing on EU weakness rather than the US president, suggesting they see this as an opportunity to build support,” he said.