On the 20th of January, a palpable wave of relief washed over European leaders when Donald Trump, during his inauguration speech, elected to forego any mention of tariffs impacting European goods. Yet this sense of ease was fleeting. Just hours later, as he disembarked from Air Force One at Joint Base Andrews, he greeted reporters with a pointed remark: “It will definitely happen with the European Union.” How quickly the horizon can darken when it comes to transatlantic relations.
Trump’s self-assured declarations painted a stark picture for the EU. “They’ve really taken advantage of us,” he asserted with unmistakable conviction. His list of grievances was troublingly specific; he lamented the lack of imports from Europe. “They don’t take our cars. They don’t take our farm products,” he complained, while boasting about the numerous American goods flooding the European market: millions of cars, vast quantities of food, and a range of farm products. His declaration that “the European Union is really out of line” seemed to echo a familiar mantra of discontent.
Interestingly, the reality presents a different narrative. The trade deficit Trump’s administration has focused on is considerably less severe than claimed. According to the Office of the United States Trade Representative, the figures reveal Europe wielding a trade surplus of $131.3 billion in goods, while the US benefits from a $71.2 billion surplus in services—an area that had impressively surged by nearly 20% in 2022.
The setting shifted conspicuously at the World Economic Forum in Davos. Trump unabashedly aired a series of grievances against the EU, accusing it of “treating us very, very unfairly.” Whether the subject was the contested sea wall at his golf course in Doonbeg—or an unexpected complaint regarding VAT—the litany continued. How could one man’s grievances stretch across such disparate issues, all while masking deeper motivations?
The unpredictability of Trump’s policy-making style has sparked caution among economists. Most experts agree that utilizing tariffs as a blunt force weapon could dismantle well-established supply chains among the US, Canada, and Mexico—a consequence likely to inflict harm not only on Canada and Mexico but on American manufacturers and consumers as well. Trade deficits with these nations have widened since 2016—a point of contention fueled by Trump’s fixation on illegal immigration and the cross-border smuggling of fentanyl rather than genuine trade imbalances.
Yet, the reality is that the actual volume of fentanyl trafficked across the US-Canada border is modest. Consequently, the sweeping tariffs borne from perceived grievances against Canada evoke notions of petulance, even vindictiveness. Some analysts speculate that Trump might harbor intentions of diminishing Canada’s economic standing, whimsically envisioning it as the 51st state.
In stark contrast, Trump’s stance towards China has appeared somewhat lenient. His administration has imposed merely a 10% tariff on exports, raising eyebrows and prompting theories. Economist Paul Krugman suggested that Trump’s apparent acquiescence to China might be an attempt to placate Elon Musk and safeguard Tesla’s sales in that formidable market. His further speculation—that substantial purchases of Trump’s personalized bitcoins could be, in fact, conduits for Chinese government interests—painted a picture of a complex web interlinking global trade and high-stakes politics. While Krugman admits his theory lacks concrete proof, he finds it credible.
By late yesterday afternoon, Trump made headlines again. He announced a temporary pause on the contentious 25% tariffs aimed at Mexico and Canada, in exchange for commitments from Mexico to bolster border security. Following a conversation with the President, Canadian Prime Minister Justin Trudeau pledged nearly 10,000 frontline officers to assist in securing the US border, among other stringent measures against drug cartels. This rapid response underscored a striking narrative: Trump was ready to use pressure tactics not merely for punitive reasons but to craft victories that resonate with his support base.
Agathe Demarais, a senior policy fellow at the European Council on Foreign Relations, noted the apparent logic behind his focus on Canada and Mexico. She suggested that Trump may anticipate quick concessions on issues like immigration from Mexico, viewing such negotiations as significant wins within the context of American politics. Meanwhile, establishing a similar level of flexibility with the European Union seems improbable; the EU, with its many intricate political frames, lacks the agile response capabilities of Mexico.
Despite efforts by the European Commission to engage in discussions about increased purchases of American liquefied natural gas, the reality suggests that this might not be a viable solution. Companies tend to prioritize price over political goodwill, and Demarais forecasts that simply encouraging increases in LNG imports is a misguided hope. Could Europe offer something more palatable to Trump to alleviate the looming threat of tariffs?
One avenue could be enhanced military cooperation— a pledge to procure more US defense equipment might sweeten relations. Yet the task of unifying European defence strategies presents its own challenges. While discussions in Brussels aim for a candid debate on the matter, considerable divergences persist among member states regarding reliance on US military supplies versus bolstering Europe’s defense industry.
The specter of existing EU tariffs that could retaliate against Trump’s actions looms large. In 2018, the EU responded to US tariffs on steel and aluminum with targeted tariffs on American goods synonymous with Republican constituencies—a not-so-subtle reminder of the intricate relationship between trade and domestic politics. As European leaders emphasize unity as their bulwark against potential economic onslaughts, it raises a pertinent question: can they maintain this solidarity amid external pressures?
As the world awaits the fruits of Trump’s policy decisions, one thing appears clear—the EU’s resilience and unity will be paramount in navigating the volatile waters ahead. Taoiseach Micheál Martin underscored this sentiment, proclaiming, “In unity, there is strength.” But the challenge remains: will this truly hold, or will divisions appear under pressure?
Edited By Ali Musa
Axadle Times International – Monitoring
