EU/US Friendship at the end of the road...

With the Trump tariffs, America is no longer a reliable trading partner. No one even knows what the tariffs will be tomorrow. let alone the next week.

It appears that a 25% tariff will be placed on EU imports, following the upgraded 20% on China, and 25% on Canada and Mexico.

I would prefer a self-sufficient Europe that reduces trade with the US.

The MAGA America first is no longer a trusted ally. America sees the EU as a competitor, and would prefer to deal with individual countries to get more favourable trading terms, than the trading block as a whole.

America is no longer the flagship Democracy, they are Oligarchs that want monopoly globalisation.

In 2024, trade in goods between the United States and the European Union (EU) reached significant levels:

1. U.S. Exports to the EU: $370.2 billion
2. U.S. Imports from the EU: $605.8 billion

This resulted in a U.S. goods trade deficit with the EU of $235.6 billion.

……

Economic theory favors floating exchange rates and the theory of comparative advantage. But it also says that chronic structural trade imbalances have to be addressed.

And when the country in deficit is also the country providing the more favorable trade terms, the answer is obvious ….make things fairer.

Trump is dead right.

Have to agree

America convenienty does not include digital products as a products, intead labelling them as services.

Either way - trade is trade. (product or service). Big Tech label many of their products - as services.

I see no reason why products should be get tarrifs, if services do not.

Allowing an international service provider to pay no tax penalises the local supplier who has to pay corporate tax. Big Tech love Ireland to avoid paying the standard rate of corporate tax in the EU.

Perplexity AI opines...

Based on the most recent data available, the total trade between the United States and the European Union in 2023 reached an impressive €1.6 trillion, which translates to approximately $1.7 trillion3.

This figure includes both goods and services.

Breaking down the trade components:

1. Goods trade:

1. Total bilateral trade in goods: €851 billion ($917 billion)
2. EU exports to the US: €503 billion ($542 billion)
3. US exports to the EU: €347 billion ($374 billion)

1. EU goods trade surplus: €157 billion ($169 billion)3

1. Services trade:

1. Total bilateral trade in services: €746 billion ($804 billion)
2. EU exports to the US: €319 billion ($344 billion)
3. US exports to the EU: €427 billion ($460 billion)

1. EU services trade deficit: €109 billion ($117 billion)3

Regarding trade imbalances and deficits:

The overall EU-US trade is relatively balanced, with a difference of just €48 billion ($52 billion) in 2023, equivalent to only 3% of the total trade3.

The US goods trade deficit with the EU reached a record high of $235.6 billion in 202424.

For the entire year of 2024, the US overall trade deficit (including all countries) increased by 17% from 2023, reaching $918.4 billion4.

The EU maintained a trade surplus with the US in goods trade, amounting to €156.7 billion (0.9% of GDP) in 20233.

It's important to note that while the EU has a surplus in goods trade with the US, this is partially offset by the US surplus in services trade. The trade relationship between the EU and US remains the largest and most integrated economic relationship in the world, supporting millions of jobs on both sides of the Atlantic3.

Good point, but there are no real alternatives for the tech surplus..,,it’s the result of superior technology, not tariffs as is the case with cars for example.

The US because of its highly innovative economy offsets the punitive terms of trade in goods. But the more innovative, less substitutable economy remains in deficit. Stanford university is doing more innovation in AI than the whole of Europe

Also the balance in goods has a bigger effect on politically sensitive considerations…like jobs.

So no the offset doesn’t make the game fair. Based on the technology innovation the US has given the world, overall trade should be solidly in surplus. Shark you are able to make this very argument because Perplexity AI was invented, in California not in Düsseldorf.

I knew this was true, without using AI. I used AI to do a content dump to provide all the numbers, etc.

So now it is a different set of rules because of US Big Tech has blessed the world.... Previously it was because of WW2.

America's Big Tech gives the world monopolies that close down the market. I would rather Europe had its own market, given that Europe invented the web, on which all this new technology is based.

The best AI person in the world for many years was from the UK (Deepmind) before he destroyed his career when Google purchased his company.

The point is the EU thinks they are being screwed, and the US thinks they are being screwed. Rather cut back global trade and bring back protectionism.

The US has more cultural war issues than the EU. Big Tech will probably destroy America in the medium term. A few Big Tech companies lose market share, and the US are in recession

The stock market will be America's doom. The more acquisitions and less competition, the richer shareholders are getting against the Democratic interests of the US

German chancellor Friedrich Merz said that any discussions on an emergency fund for defence and infrastructure spend remained in early stages, but insisted there was “great urgency” to progress these talks as soon as possible.

Merz also offered his comments on the EU-US relations under Donald Trump, saying that recent signals from Washington highlighted the need to “act independently in Europe.”

In remarks likely to raise tensions with the US, he appeared to suggest Trump and vice-president JD Vance’s angry reaction to Ukrainian president Volodymyr Zelenskyy’s comments in the Oval Office was “a manufactured escalation.”

He also highlighted “a certain continuity” in interventions by senior US administration officials, including Vance’s speech at the Munich conference, which was highly critical of European allies.

He said he was not planning a trip to the US until the new government is confirmed.

It’s both WW2 (and WW1) and tech. We could throw in mass production going back to Ford….space and commercial satellites. That’s not to say Europe doesn’t have brilliant people and hasn’t innovated…..but it hasn’t changed the world in recent times.

Trade terms should be even. Document the differences and set a time frame, 3 years perhaps, to get into balance. That would be a better solution than tariffs.

As for competition in the US and tech…no worries. Tech companies have far fewer barriers to entry than old style dominant competitors. Deep seek proved that in the last few weeks. The only company that has some structural barriers is Apple.

Trump has energized Europe….the stock market is up today. Not just defense, but also staples like Unilever and Nestle.

Meanwhile Taiwan Semi is expected to invest $100 billion in the US as a result of Trump’s pressure.

Interesting times but the result is still very unclear.

This is just Trump style narrative:

1. Say that Europe has unfair trade practices, a large deficit, and it should be made "fair" etc.
2. When confronted by facts (e.g. the trade between the US/EU is the same), then say that the US does not need to follow the same rules. So it is not about being fair at all.

Should we credit Africa for patenting the wheel so they can get unfair benefits in trade?

Trump was rude to Zelenskyy when he brokle protocol by raising his commands to Trump befoee the official meeting and he and that wa what Zelenskyy deserve 100%, He believes that he wa dealing with Biden whom he ordered arround. If was in Trump's position I would have gotten up and sent Zeleskyy packing, Negotations and commands like he tried to give to the USA are done and definitely not in fomt of the media.

According to Starmer the relationship is sound and nobody in Europe and negotiate anything with Putin and the support thr negotiation process and Starmer went ffirther and said he phoned Trump before yeaateys meetin gand Trump was happy to carry on wth the negotiation process. It is obvious that Europe and the USA on issues and he went quiet afte that meeting.

Now suddenly Zelenskyy wants to sign the Rare Mineral Treaty.

So all that happen is that the little shlt spoiled his own broth and matters will go forwad whether he likes it or not.

.

Those evil liberals from Europe, fancy forcing America to import so much from them.

Got to pity those unfortunate Americans who have no choice but to import shit they don't want.

Who knows one day these imbeciles might realise they have a choice in this.

Trade with the US, Russia ranking ...............23

Australia 21

Ireland 12

Well perhaps we should levy a 20% VAT on all those German cars and see how many are sold then. Because of VAT European products going abroad are advantaged vs imports, which pay the full VAT on landed value. No VAT is paid on exports and input rebates can be claimed. Any sales taxes in the US are generally at much lower levels.

Combine that, selectively high import duties, quotas and other barriers and you have an unfair system.

And the trade is not the same ….Europe still has a a large trade surplus. That despite the fact that they are under represented in technology and in agriculture. In the things both areas produce they have a massive surplus, in part because of luxury goods, but also because of trade practices,

ChatGPT opines...

Mozart’s argument presents a misinterpretation of the VAT system and oversimplifies the trade balance issue between the EU and the U.S.

Misconception About VAT and Trade Advantages

The assertion that VAT gives European exports an unfair advantage is misleading. VAT (Value Added Tax) is a consumption tax, meaning it is levied at the point of sale only within the country of purchase. The reason VAT is not applied to exports is because the final taxation should occur where the product is consumed, which aligns with global tax norms, including in the U.S., where no VAT system exists but sales taxes function similarly. Conversely, imports to the EU do pay VAT upon entry, just as U.S. goods entering the EU face similar tax treatment.

Thus, there is no unfair advantage—both domestic and imported products pay the same VAT when sold in the EU.

U.S. Sales Tax vs. VAT: A Flawed Comparison

While U.S. states apply lower sales taxes (which vary by jurisdiction), these are fundamentally different from VAT. The U.S. does not impose VAT on exports, either. Therefore, suggesting that VAT rebates on exports distort trade ignores that U.S. companies also benefit from tax structures that favor exports, such as tax incentives for foreign-earned income.

Trade Balance Differences and Economic Strengths

The claim that Europe maintains a trade surplus despite being "underrepresented in technology and agriculture" ignores the fact that Europe dominates in high-value manufacturing sectors, particularly in automotive, aerospace, and luxury goods, areas where U.S. exports are relatively weaker. The U.S., on the other hand, enjoys a significant services trade surplus with the EU, especially in tech, finance, and intellectual property, where American firms like Google, Microsoft, and Apple dominate.

Tariffs and Protectionist Measures Exist on Both Sides

While the U.S. complains about European import duties and trade practices, it also enforces protectionist policies. For example:

1. The U.S. maintains tariffs on European steel and aluminum.
2. The Inflation Reduction Act (IRA) provides subsidies for U.S.-made electric vehicles, disadvantaging European automakers.
3. U.S. agricultural subsidies distort global trade, making American farm goods more competitive than they would be otherwise.
4. 
   

Luxury Goods and High-Value Trade Are Natural Market Advantages

The argument that Europe's trade surplus is "unfair" because of luxury goods is weak. High-end brands like Louis Vuitton, Ferrari, and Rolex dominate globally due to market demand, brand equity, and craftsmanship, not because of protectionism. If the U.S. does not have a comparable market presence in these industries, it is a matter of competitive dynamics, not unfair trade practices.

Conclusion:

Mozart's argument simplifies a complex issue and selectively presents disadvantages without considering U.S. advantages in global trade. VAT policies are standard tax practices, trade balances are driven by competitive advantages in different sectors, and both the U.S. and EU use tariffs and subsidies to protect their industries. Instead of focusing on "fairness" in trade surpluses, a better approach would be for the U.S. to improve its manufacturing and export strategies rather than rely on punitive tariffs that risk damaging economic ties.

Explanation: Imports to the EU Pay VAT Upon Entry

VAT (Value Added Tax) is a consumption tax applied to goods and services at the point of sale within the EU. This means that any product sold within an EU country must have VAT applied to it, whether it is produced domestically or imported from another country.

1. How VAT Works for Imports into the EU

When goods enter the EU from outside countries (such as the U.S.), the importer is required to pay VAT upon entry before the goods can be sold within the EU market. This ensures that imported goods face the same tax burden as locally produced goods.

For example:

1. A French company imports American laptops to sell in France.
2. When the laptops arrive at customs, French VAT (typically 20%) must be paid on the import value.
3. Once VAT is paid, the laptops can be sold to consumers at the same tax rate as French-made laptops.

This system prevents foreign goods from having a tax advantage over local products, ensuring fair competition.

2. U.S. Goods Entering the EU Face the Same VAT Treatment

Mozart suggests that the VAT system favors EU exporters while disadvantaging U.S. imports. However, this is not true, because VAT applies equally to all goods sold in an EU country:

1. Whether a product is made in Germany, France, or the U.S., it must include VAT when sold in the EU.
2. VAT is not a trade barrier, as it applies to both imported and locally produced goods at the same rate.

For example:

1. If a German car is sold in France, French VAT is applied.
2. If a U.S. car is sold in France, the same French VAT is applied when it enters the country.

The VAT system does not discriminate against U.S. goods—it ensures that all products in the EU are taxed equally at the point of sale.

3. Why VAT is Collected at the Border for Imports

Since VAT is a consumption tax, it must be applied when the product is first introduced into the EU market, so that:

1. Imported goods do not enter the market untaxed, avoiding unfair competition.
2. Governments can collect VAT revenue properly, as imports would otherwise bypass national tax systems.

This process is standard worldwide—most major economies apply consumption taxes at the point of import, including Canada, Australia, and China.

4. What Happens After VAT is Paid on Imports?

Once VAT is paid upon import:

1. The importer can sell the goods to consumers within the EU at standard VAT rates.
2. If the importer is a business, they can reclaim the VAT later, just like a domestic producer would.

This means VAT is not an extra financial burden on businesses but simply part of the tax system.

Conclusion: VAT on Imports Ensures Fair Taxation

Mozart’s claim that VAT gives EU products an advantage ignores that all goods sold within the EU—whether local or imported—face the same VAT tax burden. Imports from the U.S. must pay VAT upon entry, just as EU businesses must charge VAT on their domestic sales.

This does not create an unfair trade advantage—instead, it ensures that: ? Imported and local goods compete on equal tax terms.

? VAT is correctly applied to all purchases within the EU.

? Governments collect tax revenue fairly from both domestic and international sellers.

Now if you used Chat GTP you wouldn’t be so misled:

Yes, in a way, VAT on foreign imports indirectly benefits local businesses and governments by generating tax revenue that might otherwise come from corporate or other taxes. Here’s how this works:

1. How VAT on Imports Benefits Government Revenue

When a foreign company sells goods into the EU, its products must pay VAT upon import. This generates revenue that:

? Funds government programs (healthcare, infrastructure, etc.)

? Reduces reliance on corporate taxes or other forms of taxation

? Creates a level playing field since domestic products also include VAT

If VAT revenue is high enough, a government may not need to rely as heavily on corporate taxes, effectively reducing the tax burden on local businesses.

2. How VAT on Imports Affects Local Companies

1. Local companies do not pay VAT when producing, only when selling (since they deduct VAT paid on inputs).
2. A foreign company’s goods must pay VAT at the border, which can make imported goods more expensive than local alternatives.
3. This can act as a de facto protectionist measure, giving domestic firms a competitive advantage.

?? Example:

1. A U.S. company exports electronics to France.
2. Upon arrival, 20% VAT is applied—increasing the price for consumers.
3. A French electronics company doesn’t face this immediate tax hit and can deduct VAT on production inputs, helping its cash flow.

In this sense, VAT shifts the tax burden toward consumption (buyers) rather than local producers, which could be seen as an indirect subsidy for domestic firms.

3. Is This a Hidden Trade Barrier?

Some critics argue that VAT on imports acts as a hidden trade barrier, because:

1. Imports are taxed immediately but exports are VAT-free, benefiting local exporters.
2. Foreign companies do not benefit from VAT deductions, unlike local businesses.
3. Countries with high VAT rates (like the EU) collect significant tax revenue from imports, potentially reducing corporate taxes.

However, VAT is not a direct tariff—it applies to all goods equally (domestic and foreign). The difference is that local firms can reclaim VAT on inputs, giving them an operational advantage.

4. Bottom Line

?? Yes, VAT on imports contributes to government revenue, potentially reducing the need for higher corporate taxes on domestic businesses.

?? Yes, VAT can make imports more expensive, indirectly helping local firms.

?? No, VAT is not technically a subsidy, but it does create an advantage for domestic businesses by allowing VAT deductions.

Would you like a comparison of how this works in different countries?

Copy and then paste what you just wrote into ChatGPT, preceded by Fact Check this:

The provided text analyses how Value-Added Tax (VAT) on imports affects government revenue and local businesses within the European Union (EU). It suggests that VAT on imports benefits governments by generating tax revenue and may indirectly advantage local businesses by taxing foreign goods at the border. Let's fact-check these assertions:?

1. VAT on Imports and Government Revenue

VAT is a consumption tax applied to goods and services at each stage of production and distribution, ultimately borne by the final consumer. When goods are imported into the EU, VAT is levied to ensure that imported products are taxed similarly to domestically produced goods, maintaining fair competition within the EU market. This system ensures that all products competing in the same market face identical tax treatment, thereby maintaining neutrality in taxation. ?forbes.comiccwbo.org

2. VAT on Imports and Local Companies

The text suggests that VAT on imports can act as a de facto protectionist measure, giving domestic firms a competitive advantage. However, VAT is designed to be neutral and does not create barriers to international trade. It ensures that all products, whether domestic or imported, are subject to the same tax when consumed within the EU. Therefore, VAT does not inherently advantage local businesses over foreign ones.?iccwbo.org

3. VAT as a Trade Barrier

The assertion that VAT on imports acts as a hidden trade barrier is a common misconception. VAT is a consumption tax applied equally to all goods and services consumed within a country, regardless of their origin. It does not discriminate between domestic and imported goods, thus not constituting a trade barrier. ?

4. Bottom Line

The text correctly notes that VAT is not technically a subsidy but suggests it creates an advantage for domestic businesses by allowing VAT deductions. In reality, VAT is structured to be neutral, ensuring that all products in the same market are treated equally regarding tax obligations. ?VAT Update+1iccwbo.org+1

Conclusion

While VAT on imports does contribute to government revenue, it does not inherently reduce the need for higher corporate taxes on domestic businesses. Additionally, VAT does not make imports more expensive relative to domestic products, as it is applied equally to all goods consumed within the EU. Therefore, VAT does not act as a protectionist measure or a hidden trade barrier.

Tale It this way….if VAT was high enough to eliminate corporate taxes, a foreign firm would pay this high VAT. But because there was no income tax to offset, would then pay income tax in their home country, as well as the high VAT. Obviously VAT isn’t high enough to accomplish that in total….but it has that tendency. And it’s certainly way higher than US sales taxes which is the equivalent tax in the US.

Higher income taxes are offset in the system, higher VAT taxes aren’t.

Given that the US is selling more services than products, the current international tax system appears to be more advantageous to them.

While services are not subject to sales tax, local service providers must add vat and pay corporate tax —unlike international providers, who do not (at least before the introduction of the global tax system, which is not being widely enforced anyway).

I don't believe that a digital product is a service, and these companies should be paying sales income tax on this.

This favours the US as they can get away selling a product as a service and get around paying income tax.

I assume this is what you are talking about:

?? Example (B2B Service from France to Spain)

1. A French IT firm provides services to a Spanish company.
2. The French company does not charge VAT (reverse charge applies).
3. The Spanish company self-assesses VAT on its tax return but can also deduct it, so there’s no actual VAT payment.

…..I wasn’t aware of this mechanism, not having worked in IT. That’s actually quite significant. It means VAT doesn’t effectively exist for services, so that’s a level playing field.

B2B services are about $200 billion and general goods about $350 billion. So the overall VAT rates drops from 20% to a weighted number including services of about 0.63 x20 or 12.7%….better. Although still well above the average US sales taxes rate of 7.3%.

But I concede the VAT effect is smaller than I thought. Nice discussion

By the way the text you fact checked came from ChatGTP….it all depends on how you ask the question. It was fact checking itself. But the fact checked version got it wrong…..taxes are fungible and if more taxes are levied via VAT, it leaves room for lower taxes in the country where levied. That isn’t true of the exporting country that doesn’t participate in the VAT….theoretically leaving the door open for lower corporate taxes ceteris paribus,

Poor old sharknutjob.

The clown is whing away that Trump dares yo put reciprocal tarrifs on trade partners. How could he it's do unfair sob, sob.

Trump should just be a nice man and allow others to use America as a piggy bank.

No sane person can argue against reciprocal tarrifs.

Secondly if any body thing the country with a trade surplus can win a tarrifs war with Trump they have a lose screw. The math's does add up for them.

So expect Canada to fold like a Cheap Suit.

Very please to hear President Trump is pausing all arms arms and funding to Ukraine. Watch the EU Globalists lose their little minds then come scurrying back tail between legs to Trump.

Hopefully Trump will drop Ukraine and leave NATO. One thing for sure Trump will not risk a war with Russia just to aooease that perverted corrupt tyrant Zelensky. The scumbag is toast.

Elon Musk has been saying the US must leave NATO, over the last few weeks, repeatedly.

I expect the US will, as Trump has been floating this idea for ages.

The problem though is now Trump on Putin's side? Is some weird twist of fate, perhaps the US will give weapons to Russia to fight against Europe.