A leading German economic advisor has voiced concerns regarding the recently concluded EU-US customs agreement, suggesting it highlights a weakening of Europe’s negotiating power. Veronika Grimm, in remarks to Politico magazine, stated that the agreement likely reflects the current balance of power and urged the EU to prioritize its own growth agenda, warning of a potential loss of competitiveness.
While acknowledging that the agreement will place a burden on the German economy, Grimm emphasized that it is positive that high tariffs on the automotive industry have been avoided. She also deemed acceptable reliance on US energy and arms imports, suggesting long-term dependence in both areas.
Grimm attributes the situation to a pattern of European policymakers failing to be transparent with citizens and masking structural problems through increasing debt. She criticized the current course of action, where debt is used to finance US arms and energy purchases, benefiting the US economy while leaving Europe with long-term liabilities. This approach, she argues, also allows for postponing necessary reforms to social spending.
Expressing concern about the level of awareness among policymakers, Grimm highlighted a shifting geopolitical landscape and a widening technological gap. She warned that the viability of the Western value system is intrinsically linked to the economic strength of Germany and the EU.
Grimm emphasized the need for increased productivity, particularly through technological advancement, arguing that current regulations, driven by a precautionary principle, are stifling innovation. She advocated for increased funding for high-risk, high-return research, deregulation and a reduction in bureaucracy to foster a more attractive environment for startups, along with a reassessment of current technology risk regulations and labor market restrictions.
The agreement has also drawn criticism from within Germany. Franziska Brantner, the national chair of the Green Party, condemned the customs deal as detrimental to Europe, placing partial responsibility on German Chancellor Friedrich Merz. Brantner accuses Merz of putting undue pressure on European Commission President Ursula von der Leyen to reach a swift agreement, thereby weakening her position. She further suggested he should have advocated for a digital levy on large US tech corporations.
Brantner also expressed unease regarding a planned trade deal involving US LNG gas imports, warning it could undermine European climate goals. She characterized the EU’s concessions as “appeasement” suggesting it reinforces the tactics of the US administration. She highlighted concerns about tariffs on European steel and aluminum, particularly impacting Germany and asserting that the agreement introduces new burdens rather than providing relief.