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American Focus > Blog > Economy > Getting “Screwed” on Trade? – Econlib
Economy

Getting “Screwed” on Trade? – Econlib

Last updated: June 19, 2025 12:30 pm
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Getting “Screwed” on Trade? – Econlib
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Back in February, Donald Trump made a bold assertion that the European Union was established with the explicit intent to “screw the US” regarding trade. The Trump Administration has echoed this sentiment with the reimposition and subsequent pause of tariffs on the EU, sometimes adding that the value-added tax (VAT) is another tool aimed at disadvantaging American interests. These claims, while certainly colorful, are more humorous than substantive (for a more nuanced historical perspective on the EU, see this article and here for Scott Sumner’s insights on VATs. Brian Albrecht provides an excellent discussion), but let’s humor the narrative for a moment: if the EU was indeed crafted to harm American trade, how effective has that been?

Answer: not very.

In the New York Times, David Brooks presents a data-rich analysis that delves into the economic landscapes of the US and Europe. Drawing from data provided by the OECD, The Economist, and political scientist Yascha Mounk, he reveals that the US economy is significantly wealthier than its European counterparts, with this wealth gap widening over time:

“The so-called era of neoliberal globalism has not produced the American carnage that Trump imagines. According to political scientist Yascha Mounk, during the 1990s and early 2000s, America and Europe were similarly affluent. Today, however, the American economy has surged ahead of other wealthy nations. The G.D.P. per capita in the US stands at around $83,000, while Germany’s is about $54,000, France’s approximately $45,000, and Italy’s around $39,000.”

Even in terms of average wages, Mississippi—home to the lowest average wages in the US—offers higher compensation than many EU nations.

See also  The Left and the Right: A Non-Mysterious Puzzle

The US excels in other economic metrics as well. Currently, there are 1,873 companies in America valued at over a billion dollars, surpassing all of Europe by over 600 firms. Additionally, the US boasts 96 unicorn startups, nearly five times the total found in the European Union. According to the World Bank, the United States remains the premier destination for both foreign and domestic investment. In 2023, the US recorded a net investment flow of $348.8 billion, indicating a strong preference among investors to pour money into the US rather than seeking opportunities abroad. Conversely, the EU faced a net investment outflow of -$379.5 billion, suggesting that Europeans are more inclined to invest outside their borders than to welcome foreign capital.

The evidence continues to mount.

Some may argue that Europe possesses certain intangible qualities that make it superior to the US. While these points may hold water, they are largely irrelevant to the claim that Europe is harming America through trade. If the EU was indeed designed to damage the US economically, they are certainly failing spectacularly at it.

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