Trump proposes to impose tariffs on all European goods
To begin with, he decided that a stimulating tariff war on all fronts can’t hurt. Mexico and Panama are waving white flags; Denmark, while combative, is essentially reminding everyone that it has always been a friend of the U.S.; and in Canada, things are «all with Big Trudeau» for now — though there are prospects. Meanwhile, China has thrown down the gauntlet, taking action against Google, American coal, and liquefied natural gas.
The idea that Trump will impose tariffs on the European Union doesn’t surprise anyone; preparations for this began back in the summer. Even then, candidate Trump was quoting figures of 10 to 20 percent.
The initial idea of European officials was to negotiate with Washington and promise to buy more American goods. In this sense, Ursula von der Leyen even considered replacing purchases of Russian gas with American liquefied natural gas. The president of the European Central Bank, Christine Lagarde, also mentioned the prospect of buying more American products. But it turns out that this strategy doesn’t work.
Trump is angry with the Europeans because the trade imbalance clearly favors Europe. In 2023 (final data for the previous year are not yet available), the European Union sold 504 billion euros worth of goods to the United States while importing 347 billion, leaving a surplus of 157 billion in the Old World. Preliminary data indicate that by the end of November 2024, the surplus had reached 183 billion in favor of the EU.
«They don’t buy our cars or our agricultural products», Trump complained, «and yet we take both from them. I don’t have specific dates right now, but they’re certainly going to pay a high price-and soon».
What will the European Commission do? All information on the discussions on this matter is currently confidential, but judging by the statements made by Macron and Tusk at the last informal EU summit, the resistance to the American onslaught is expected to turn into a counterattack. In all likelihood, a list of American goods is already being prepared for mirror tariffs to be imposed by the EU if necessary.
«When our commercial interests are under attack», the French president declared in Brussels, “Europe — and we act as a united power — must command respect and, consequently, respond. The new administration’s statements are pushing the EU toward greater cohesion and a more active response. This is, after all, a question of collective security».
The issue of unity, oddly enough, may not play the most beneficial role in this whole ditch-digging affair. Different countries have different relationships with the United States and different degrees of dependence on the U.S. trade balance. For example, it’s two percentage points of GDP for Germany or Italy, but only 0.3 for France. As a result, difficult negotiations between EU countries have already begun or are about to begin. Meanwhile, Trump will do his utmost to interfere in these negotiations in order to break the European front and shatter this very unity.
«The current division of the European Union is precisely what will play into Putin’s hands’, writes former British Foreign Secretary William Hague in his column in The Times. Moscow is now working on new schemes to sow discord in our societies while we are distracted trying to cope with the unruly US president. This trade war will spread very quickly. Just look at the Airbus plane — it is assembled in France, but its wings are made in Britain».
Incidentally, Trump had promised the British some leniency at the time the sanctions and tariffs were imposed — apparently he was satisfied with his telephone negotiations with British Prime Minister Kir Starmer. This fact, by the way, was seized upon by the German Chancellor, who, at an informal summit in Brussels, called for strengthening ties with the United Kingdom, as it could prove useful in building relations with the United States.
By the way, the Brussels informal summit was devoted to defense issues, which is why the British Prime Minister was present. The NATO Secretary General reminded everyone that EU unity can also be achieved by strengthening European defense — a move that will also help strengthen the transatlantic partnership. But it is clear that the U.S. sells far more weapons to NATO than all other countries combined, so by increasing its contributions, the EU will only be helping to replenish the American treasury.
During his first term, Trump had already imposed tariffs on imported European steel and aluminum. The EU responded with tariffs on Harley-Davidson motorcycles, bourbon, brand name jeans and orange juice. It’s worth noting that all of these goods are produced in «Republican» states. And that’s because there’s nothing better to do.
What is the struggle about? Take the example of France. In its trade profile, the United States is the fourth largest customer, while French exports rest on three pillars: aviation, pharmaceuticals and wine.
Aviation — that is, Airbus — is its largest exporter to the U.S. There was once a serious Euro-American conflict over state aid to civil aviation, but in 2021 the parties signed an agreement to suspend tariffs in this sector for five years. Moreover, the American Boeing depends on supplies from French giants Thales, Safran and Dahler. Therefore, nothing significant is expected to happen in the civil aviation sector in the near future.
French pharmaceuticals pose «a real threat to the industry», according to Robert Kennedy, a candidate for U.S. Secretary of Health and Human Services. As a result, immediately after the election results were announced, shares of French pharmaceutical giant Sanofi — the leading vaccine manufacturer — dropped by 4 percent. Later, the U.S. president declared that all European drugs — not just French ones — should cost no more in America than they do in Europe.
French wine and cheese producers are not particularly afraid of losing their market. During his first term, Trump had imposed a 25 percent tax on the export of products from this sector, but Biden repealed it. In addition, Macron had launched an attack on American tech giants at the time, so the swords crossed on slightly different issues.
According to estimates by the Center for Prospective Studies and International Information (CEPII), if Trump goes all the way and implements the promised tariffs, French exports will shrink by 0.5 percent and GDP by 0.1 percent. But that’s just France — there are countries that are even more dependent on trade with the U.S. That’s why we’re seeing some pretty firm rhetoric from EU leaders, promising to defend every inch while striving to build calm and equitable relations with the United States.