Getting “Screwed” on Trade? – Econlib
Has the European Union Really Been Screwing the US on Trade?
Back in February, Donald Trump made a bold claim that the European Union was formed with the intention of “screwing the US” on trade. This claim has resurfaced with the recent back and forth on tariffs between the US and the EU, with Trump even going as far as to suggest that the value-added tax (VAT) in Europe is another way Americans are being taken advantage of. While these claims may seem outlandish, let’s entertain the idea for a moment: what if the EU was indeed formed to harm American interests, and what if VATs were designed to do the same? How successful have these alleged actions been?
According to a recent article in the New York Times by David Brooks, data from sources like the OECD, The Economist, and political scientist Yascha Mounk paint a different picture. The US economy has consistently outperformed European economies, with US GDP per capita far exceeding that of countries like Germany, France, and Italy. Even in states like Mississippi, where wages are the lowest in the US, average wages surpass those in many EU countries.
But it’s not just GDP and wages where the US outshines Europe. The US boasts a significantly higher number of billion-dollar companies and unicorn startups compared to the EU. Foreign investment flows into the US at a much higher rate than it does into the EU, indicating a strong preference for investing in American companies over European ones. When it comes to entrepreneurship and innovation, the US is clearly leading the way.
Despite any intangible qualities that Europe may possess, the argument that the EU is deliberately harming the US through trade falls flat when faced with the data. If the EU’s goal was to undermine American interests, they have certainly failed miserably.
In conclusion, while rhetoric around trade disputes may be heated, the reality is that the US economy continues to thrive and outperform its European counterparts. The idea that the EU is actively working to harm American interests seems more like a political narrative than a reflection of actual economic outcomes.
