For decades now the United States has passively stood by as our European partners dragged their feet on NATO readiness and trade fairness. The two issues are inextricably interconnected. They demonstrate the self-centeredness of nations the United States has heavily subsidized through our outsized contribution to NATO at the same time Europe erected barriers to U.S. products while protecting its own industries.
Here was the “angel’s bargain”: America shipped our soldiers and a fortune in military spending to protect Europe and Europe protected itself and shipped us its exports. This helped rebuild Europe, but it also helped deplete America’s coffers and shake American sympathy for our erstwhile partners-in-arms. How many times over the years have we heard how well off the people of Europe are, with generous cradle-to-grave social programs and leisurely lifestyles? But how often did we ever hear from our sometimes clueless career diplomats and politicians that Europe’s well-being was bought with American largess?
Before Donald Trump came along all Europe got was hand-wringing and tepid scolding from our leaders. Maybe it took the unsparing accounting of a hard-nosed businessman to shine a bright light on this unsustainable drain of American wealth. But here’s the numbers: according to the U.S. Census Bureau, the U.S. has run a huge trade deficit with Europe for every one of the last eighteen years since 2000. The total trade deficit since 2000: two trillion dollars. That’s trillion with a “T”. (You can check the math at census.gov.)
During the same time the U.S. has contributed heavily to NATO, carrying a disproportionate share of its budget. Figuring out the exact amount isn’t easy, as the Pentagon buries much of the cost in its overall budget. But suffice it to say that the amount the United States spends on defense as a percentage of our economy greatly outpaces what European nations spend on their own defense. By this measurement the U.S. spends three times as much on defense as Germany.
Included in this cost is U.S. spending to maintain major military facilities and 35,000 troops in Europe. These are American troops who are literally standing in for European military forces generally deemed inadequate to meet their defense needs. They represent money and resources that could be used to defend our own homeland, and to support our southern neighbors in the battle against gangs, drug trafficking, and human smuggling.
That’s why President Trump is not out of line keeping after our European allies to provide more for their own defense. And he’s right to raise the U.S. trade imbalance with Europe at the same time. The reaction from European leaders will be predictably prickly and, well, defensive, but President Trump has struck an important chord for fairness and burden-sharing that Europe can no longer ignore.
Fixing this imbalance should begin with significant reforms in Europe’s trading relationship with the U.S. Let’s take autos an example. If a German-made car costing $30,000 is imported into the U.S., the import duty has been as low as 2.5 percent, or $750. But if a $30,000 American-made car is exported to Germany, the import duty has been as high as 10 percent, or $3,000. This is the kind of high tariff barrier “free trade” was supposed to erase, but didn’t. So when President Trump hammers away at the idea of “fair trade” and “reciprocity,” he’s on very firm ground, despite the overblown indignation from European Union leaders over America’s long overdue assertion of fundamental unfairness in the current trading arrangement.
Europe can and should correct this imbalance on two fronts. European manufacturers should be looking seriously at bringing more of their production to the U.S. Most European car makers already have factories in the U.S. But they could have more. BMW’s and Mercedes made in America would help ease the trade imbalance with Europe, while offsetting at least some of the high cost of U.S. spending to defend it.
At the same time, European markets should be more widely open to U.S. exports. The below-cost dumping materials like steel and aluminum into the U.S. market should cease. And European nations should finally stop whining and step up their own defense expenditures to relieve the U.S. burden.
These are not unreasonable demands, as some European leaders would have the world believe. President Trump should stick to his guns when he meets with E.U. leaders next week. His counterparts might not like the heat, but they should see the light.
This column was originally published in the Long Island Herald Community Newspapers.
Former Senator D’Amato served a distinguished 18-year career in the U.S. Senate, where he chaired the Senate Banking Committee and was a member of the Senate Appropriations and Finance Committees. While in the Senate, Mr. D’Amato also Chaired of the U.S. Commission on Cooperation and Security in Europe (CSCE), and served on the Senate Intelligence Committee. The former Senator is considered an expert in the legislative and political process, who maintains close relationships with Members of Congress on both sides of the aisle. He is regularly called upon for his advice and counsel, and is recognized for his incisive analysis of national and international political affairs. The former Senator will share insights gained from his years in Washington “with a clear-eyed view of the political forces that shape the world we live in today.” To read more of his reports — Click Here Now.