Political and economic analysts have come out of the woodwork to warn of tough times ahead for US-EU relations under Trump, with headlines in major politics and business-oriented media saying all that needs to be said about the panic gripping European capitals and proponents of the Western alliance.
“As Germany lurches from crisis to crisis, analysts fear ‘tariff man’ Trump could be 2025’s disaster” was Fortune’s take on Trump’s return. “Trump Will Test European Solidarity on NATO, Ukraine and Trade,” the New York Times predicted. “Why Donald Trump’s return is a disaster for Europe,” The Guardian bemoaned.
The common theme to these and other apocalyptic analyses on the subject relates to Trump’s proposed trade policy, with the president-elect making clear on the campaign trail that his threats of across-the-board tariffs of 10-20% on imports won’t include a special carveout for Europe.
“I’ll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together,” Trump said at a pre-election rally last week. “They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price,” he added, touting his proposed tariff-for-tariff approach, dubbed the ‘Trump Reciprocal Trade Act’.
Europe’s economies, already reeling from a series of largely self-inflicted economic crises, triggered in large part by energy price shocks resulting from a short-sighted political decision to cut off energy ties with Russia, are in much worse shape today to resist Trump head-on than they were in 2017-2021, with EU bloc leader Germany in particular facing its worst deindustrialization slump in the Federal Republic’s history.
Return of Strategic Autonomy, Moving Closer to China
“The return of the ‘tariff war’ is one of the pillars of Trump's economic policy,” EU foreign policy expert Massimiliano Bonne told Sputnik, commenting on the implications and prospects for Europe of the business mogul’s looming return to the White House.
In addition to riling up fierce economic competition with China, Bonne expects Trump’s approach to trade to have “direct consequences for Europe, both economically and strategically, so that the frictions in the US-EU-China trade ‘triangle’ will push Europe to accelerate integration processes, especially to defend its autonomy.”
“In particular, the EU will face pressure from Washington to align with US policies, which could limit European strategic autonomy. At the same time, China will see Europe as a potentially more open partner than the US, strengthening its economic and diplomatic influence on the continent,” the observer said.
German Wildcard and Threats to the European Project
Highlighting the “critical phase of deindustrialization” facing Europe’s big two economies – Germany and France, Bonne believes the situation in Germany, including the political crisis facing Chancellor Scholz, makes it a wildcard, with falling output, the crisis of the automotive sector (a pillar of the German national economy), budget deficits and the growing burden of supporting the EU banking and fiscal union could prompt voters to “push a future government to reconsider Germany’s role within the EU.”
“This would allow for greater flexibility in setting trade policies to defend local industry, including key sectors such as vehicle and machinery manufacturing, and Germany might choose to consider a more fluid policy with China. The growing political instability in Germany could therefore significantly affect the future of the EU…with potential consequences for the balance and cohesion of the European project,” Bonne said.
Ultimately, “Trump's economic and industrial policy, with a focus on protectionism and welfare reduction, is shaping up to be a terrain of uncertainty not only for the US, but for the entire global economic system,” Bonne added.
Trump’s Trade Strategy: Pro et Contra
While the president-elect’s trade proposals are “aimed at reducing the US trade deficit and encouraging reshoring, i.e. the return of industrial production to the US,” Bonne isn’t convinced of the soundness of this approach, warning that “such a protectionist policy could turn out to be a boomerang for the US economy,” with “domestic industries, which depend on global supply chains,” threatened with “heavy losses as a result of higher production costs.”
Geopolitically, “the reintroduction of tariffs risks exacerbating tensions with China, affecting not only trade but also diplomatic sectors. Beijing could respond by further diversifying its economic partners and seeking greater cooperation with Europe. This American ‘closure’ would then push China to intensify trade ties with the EU, forcing European countries to reconsider their positioning on the global chessboard,” Bonne said.
“In conclusion, in this situation, Europe is faced with a dilemma: on the one hand, American pressure for an alignment on the trade and military front; on the other hand, the opportunity to diversify its economic partnerships by moving closer to China. Trump's protectionist push could thus accelerate Europe's evolution towards a more cohesive and autonomous political entity, especially in the military sphere,” the observer summed up.