For decades now, the United States has passively stood by as our European partners dragged their feet on military preparedness and trade fairness in the North Atlantic Treaty Organization. The two issues are inextricably connected. They demonstrate the self-centeredness of nations the U.S. has heavily subsidized through our outsized contributions to NATO, at the same time that Europe erected barriers to American products while protecting its own industries.
Here was the “angel’s bargain”: The U.S. offered its soldiers, and a fortune in military spending, to protect Europe, and Europe shipped us its exports. This helped rebuild Europe, but it also helped deplete America’s coffers as well as 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 are the numbers: According to the U.S. Census Bureau, the U.S. has run a huge trade deficit with Europe every year since 2000. The total since 2000: $2 trillion. Trillion with a T. (You can check the math at bit.ly/2MWdpG4.)
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, because the Pentagon buries much of the cost in its overall budget. But suffice it to say that the amount the U.S. spends on defense as a percentage of our economy greatly outpaces what European nations spend on their own defense. According to Forbes, the U.S. spends three times as much on defense as Germany (bit.ly/2KYM8po).
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 those countries’ 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 isn’t 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 has been predictably prickly and, well, defensive, but 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 as 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 that “free trade” was supposed to erase, but didn’t. So when 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 look 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. BMWs and Mercedes-Benzes made in America would help ease the trade imbalance, while offsetting at least some of the high cost of U.S. spending to defend the Continent.
At the same time, European markets should be more open to U.S. exports. The below-cost dumping of 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. I hope Trump stuck to his guns when he met with E.U. leaders this week, after we went to press. His counterparts might not like the heat, but they should see the light.
Al D’Amato, a former U.S. senator from New York, is the founder of Park Strategies LLC, a public policy and business development firm. Comments about this column? ADAmato@liherald.com.