Six months into Donald Trump’s second term as president, his chaotic and confusing decision-making style should not come as a surprise, yet on Monday EU trade ministers struggled to make sense of his latest threat to slap trade tariffs of 30 per cent from 1 August.
The ministers, meeting in Brussels, declared the tariffs “unjustified and unacceptable,” yet pledged to work with Washington on a negotiated outcome, “one that delivers tariff relief and brings back stability and predictability to transatlantic trade,” as their joint statement said.
At the same time, they made plans for more retaliatory measures, which could include mirrored tariffs on US goods and even specific action against US tech giants. This second retaliation package of €72 billion (£62bn) would be on top of the €21 billion (£18bn) already agreed, which would come into effect if Trump carries through with his own tariffs.
EU officials say that they have been negotiating in good faith since April, when Trump announced his unilateral tariffs on most of the world, but they are unclear about what the President’s aims are. Does he want Europe to buy more US cars? More grain? More liquefied natural gas (LNG)? More weapons? Trump’s own representatives have been unable to explain, and when they convey the EU’s offers to the White House, he dismisses them. “It is difficult to negotiate with a jellyfish. The only predictable thing about Trump is his studied unpredictability,” says one trade negotiator.
Trump shakes hands with Britain’s ambassador to the United States, Peter Mandelson, after the US and Britain reached a deal on trade (Photo: Reuters / Leah Millis)On the face of it, the EU should be able to stand up to Trump. It has a bigger market, a bigger global trade footprint, and a similar-sized economy.
But it also has weaknesses. It needs to take its various constituent parts into account, and its 27 member states have different views on whether to hold, raise or fold in the trade poker. Trump, by contrast, bypasses potential obstacles like Congress to decide policy on a whim, and seems impervious to criticism (although business and market blowback can make him reverse course).
The EU’s diffuse power centres mean it is not only less agile, but also unable to act with Trumpian ruthlessness, by upping the ante and threatening equally hefty tariffs on US imports.
square TARIFFS AnalysisTrump has set the stage for a colossal trade war - and it could spiral out of control
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Second, the EU likes to think it has more moral fibre than to cut a deal that would keep Trump’s arbitrary tariffs in place – like Britain did with its quick and dirty agreement in May that maintained the 10 per cent duties. That would condone what the EU sees as illegal tariffs, which are forbidden under World Trade Organisation (WTO) rules. But EU officials are now looking at the UK’s deal anew, recognising that London’s pragmatism might have been more fruitful than Brussels’ slow, detailed and technocratic approach.
And third, the EU still wants Trump onside when it comes to Ukraine. On Monday, he made one of his strongest statements in support of Kyiv this year, when he agreed to send the “greatest military equipment” for Nato and available to be sent onwards to the embattled country. However, in European capitals, leaders know how changeable his mood is, and they fear he could turn off the flow of military aid and intelligence to Ukraine if he feels slighted.
EU Trade Commissioner Maros Sefcovic has warned that 30 per cent tariff rate would make it almost impossible to continue trading as before, with massive knock-on effects on supply chains, business and jobs on both sides of the Atlantic.
“I think we have to do, and I will definitely do, everything I can to prevent this super-negative scenario,” he said. But there is a gnawing recognition in Europe’s corridors of power that their hand is not nearly as strong as it should be when it comes to negotiating a deal with Trump.
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