By producing the goods Europe bought from them.
Years ago there was a movie called "Kidco." It was about a group of kids that created a successful business selling horse manure for fertilizer. They got the horse manure from their father's horse stable.
The State of California stepped in and said they weren't paying taxes on the sale of the horse manure.
The Kid called his father, and the people who supply the grain and hay to feed the horses, into court.
They asked them if taxes were paid on the hay and the grain? All the witnesses said that taxes were indeed paid on the hay and the grain.
The kid then pointed out, the government had already collected taxes on the stuff that went into the Horse, and now they were trying to collect taxes on the very same stuff that came out of the horse.
They were trying to tax both ends of the Horse!
This is where your understanding fails.
Whether you tax the front of the Horse or the back of the horse, it's *THE SAME STUFF BEING TAXED*!!!
And in case you are having trouble in understanding the analogy, Europe is the "Horse."