Published 21 January 2025
European leaders say they are better prepared for Trump 2.0 than for the first incarnation. As a new Trump presidency portends worsening transatlantic ties, EU officials are readying both carrots and sticks to either strike deals or to hit back forcefully, including a tariff list for US exports that is among the most closely guarded secrets in Brussels. But for all its preparation, Europe finds itself in a weaker position today than it was four years ago.
In the consternation across the world as it braces for an expected expansion of Trump tariffs, it is perhaps an irony that the economy that is bracing for the worst is America’s closest and oldest ally. Europe may have escaped being cited by President Trump when he waved his tariff saber over the heads of Canada, Mexico, China, and the BRICS grouping, but officials with the EU Commission and business leaders across the continent are certain of the target on their backs.
In his first term, Trump hit European steel and aluminum exporters with 25% and 10% tariffs, respectively. During his second campaign trail, Trump has promised to spread his tariff blanket further and apply tariffs of 10% to 20% on all imports into the US from all countries. For export-dependent Europe, this is not good news. The Kiel Institute for the World Economy projects that the EU economy would contract by 0.5% and Germany by 3.2% under the impact of Trump’s tariffs and the corresponding fragmentation of global trade.
Trump has shown before that his bark can be worse that his bite. But for now, EU officials and businesses take Trump’s threats very seriously. European leaders say they are better prepared for Trump 2.0 than for the first incarnation. Commission officials are readying both carrots and sticks to either strike deals or to hit back forcefully, including a tariff list for US exports that is among the most closely guarded secrets in Brussels.
Download Europe plans two-pronged approach to dealing with Trump by Keith Rockwell:
Many Europeans believe that the best way forward is to negotiate deals that may forestall a tit-for-tat transatlantic trade war. Rather than restricting EU exports, leaders of the bloc hope that the US President will be amenable to an arrangement where they buy more from America. Liquified natural gas and soybeans are two products where there is scope for increased US exports to Europe. Another option would be for European companies to invest more in factory production across the Atlantic.
But for all its preparation, Europe finds itself in a weaker position today than it was four years ago. A major war on its eastern border has driven up both energy costs and anxiety levels across the continent. The economy is sluggish and the governments of the EU’s two most powerful countries – Germany and France – recently collapsed, heralding a period of political turmoil that could last years. The need for European unity has never been greater, Senior Research Fellow Keith Rockwell writes.
© The Hinrich Foundation. See our website Terms and conditions for our copyright and reprint policy. All statements of fact and the views, conclusions and recommendations expressed in this publication are the sole responsibility of the author(s).
Author
Keith M. Rockwell
Keith M. Rockwell is a Senior Research Fellow at the Hinrich Foundation. Prior to his retirement in June 2022, Keith served as a Director at the World Trade Organization (WTO) and spokesperson for the organization for more than 25 years. He also is Global Fellow at the Wilson Center.
Have any feedback on this article?
Related Articles
