How Trump could ease US-EU trade tensions

With Jean-Claude Juncker and Donald Tusk due to retire as the President of the European Commission and President of the European Council respectively, US Secretary of State Mike Pompeo has expressed his intention of ‘resetting’ relations with Brussels. Tensions between the US and the EU have escalated over recent years due to disagreements over climate change, Iran and trade. Politico reports that Pompeo visited Brussels on Monday to meet European Parliament President David Sassoli and the EU’s incoming leadership team: Commission President-elect Ursula von der Leyen, Council President-elect Charles Michel, and the nominee for foreign affairs chief, Josep Borrell. Due to recent hostilities between both sides, the Secretary of State did not meet any of the EU’s current leaders.

US Ambassador Gordon Sondland was forced to deny that this meeting signalled that the Trump administration had given up on its relationship with the EU’s existing leadership team, and stressed that President Trump will collaborate with them when necessary. Regardless of who is leading the EU, in the meantime Iran and trade remain the two most vital issues that Brussels and Washington need to resolve. Trump could use this as an opportunity to resolve trade tensions with the EU’s new leadership team.

Trump has never liked the way the US and the EU trade with each other, and that is because he believes over the years the latter has imposed tariffs on American goods whilst Washington has allowed European products to arrive in the US with relative ease. He told a New Hampshire rally that the EU is “worse than China, just smaller. They treat us horribly.’” He has good reason to believe this.

Bloomberg says figures published last month show the EU’s trade surplus with the US stood at 75 billion euros in the first half of 2019, up more than 11 per cent a year earlier. A decade ago the EU’s bilateral surplus with the US was 18.7 billion euros. Furthermore, Germany’s surplus is by far the biggest in the bloc. Total exports outweighed imports by 112 billion euros from January to June. Berlin’s surplus for shipments remained steady at 88 billion euros for business with countries outside the bloc.

Meanwhile, the US is running a trade deficit with the EU. In 2018, the value of US goods to Europe stood at $575 billion, which was less than the value of European imports to the US ($684 billion).

The EU has managed to resist the effects of some of Trump’s tariffs so far. According to Bloomberg, the continent withstood his aluminium and steel tariffs. But this does not mean Brussels has experienced the worst of the US’s tariffs so far. The President has labelled German cars as a national security risk and he’s threatened France with a digital tax.

Nonetheless, the President’s strategy with China and the EU is to impose tariffs on their goods until they slash their own taxes on US goods. He knows that he can solve this trade war with Brussels and Beijing by drawing up separate trade deals with both sides. Trump told Al Jazeera that he is ‘very close’ to making a deal with the EU, though “it is not easy negotiating with them.” In order to make talks between both partners successful, they will have to reach an agreement on automobiles, foodstuffs, energy, airplanes and technology. Trump will be visiting Berlin soon to discuss how his country and the EU can conclude their trade discussions.

The ongoing trade war could persuade a new EU leadership team and a US administration keen on pursuing fair trade on both sides of the Atlantic that this is a chance to reach a new trade deal between Brussels and Washington. But until they do, tariffs are here to stay.