Unlock White House Watch Newsletter for Free
Your guide to what the 2024 US elections mean for Washington and the world
Donald Trump says tariff is a “beautiful word.” But he also prides himself on being a negotiator. This is how the EU addresses the president-elect’s tariff threats suggested by The president of the European Central Bank, Christine Lagarde, in an interview with the Financial Times: “not to retaliate, but to negotiate” – makes sense, at least initially. However, any EU offer to buy more American goods to avoid a rancorous trade war should be backed by the understanding that the bloc is willing to retaliate strongly if the returning president opts for punitive tariffs. Trump would surely seize on anything but as a sign of weakness.
The trade threat was amplified when Trump promised last week to impose tariffs from day one to Canada and Mexico and additional tariffs on China, underscoring a willingness to burst supply chains with even the United States’ largest trading partners. On Saturday he threatened 100 percent tariffs. about the BRICS countries if they undermined the dollar. But tariffs seem as much a negotiating tool as an ideological goal. Managing trade with Trump’s US will be a central task of the new European Commission, whose mandate officially started on Sunday, particularly given the EU’s considerable trade surplus with the United States.
Brussels has already proposed buying more American energy, military and agricultural products as a concession. Importing more American liquefied natural gas would help the EU eventually ban remaining imports of Russian LNG. Europe will also need American-made weaponry if it wants to shoulder a greater burden of defending Ukraine. This approach clearly targets two Trump priorities at once: the EU can say it is strengthening its energy and military security while helping American producers.
But the European Commission is right to keep a stick handy as well as carrots, with plans to fight back if Trump decides to impose tariffs. It is understood that he has developed retaliation duties that would particularly affect Republican-led American states. In fact, EU tariffs on bourbon, motorboats and motorcycles, imposed in 2018 after Trump introduced tariffs on steel and aluminum imports from the EU and elsewhere, are currently in place. suspended until March.
These could provide a bargaining chip, although Trump seems to care relatively little about the blows to the real American economy by his government. pressures on trade. Maintaining EU unity in its response will be vital given the temptation for member states to seek favors from the United States to protect themselves. your own interests.
To improve the global trade system’s chances of weathering the Trump storm, Brussels should also try to ensure that any deal with the United States (and the response to potential “collateral” damage from Chinese imports diverted from the United States) does not pass. ignore commercial laws. The 2018 package offered by then Commission President Jean-Claude Juncker, which avoided US tariffs on EU car exports, which Brussels’ current approach partly echoes, twisted some internal EU rules. the EU, but it was not a terrible repeal of WTO law.
There are already inevitable calls, including those from the new vice president of the European Commission. Stephane Séjourné – for a “Europe first”Strategy for key business sectors. Certainly, if Trump raises US tariffs on Chinese goods, the EU is likely to face or have to restrict difficult talks with Beijing to limit a flood of Chinese exports, similar to Western talks with Japan in the 1980s, with probable consequences. on the effects on its own exports to China.
Although the EU punches below its weight geopolitically, on trade it has a credible record of trying to maintain the rules-based order. Onerous compensations loom. But even as it seeks to defend Europe’s economic interests, Brussels should do everything it can to remain a positive force in trade, rather than being drawn into the vortex of an all-out trade war.