PoliticsEU braces itself for possible trade war with the USA
SDA
3.2.2025 - 15:53
Federal Chancellor Olaf Scholz (SPD) speaks to journalists at the informal EU summit. Photo: Ansgar Haase/dpa
Keystone
The EU is preparing for a possible trade war with the USA. Following US President Donald Trump's announcement of new tariffs on imports from Mexico, Canada and China, European heads of state and government showed their determination at a summit in Brussels not to simply accept similar decisions against the EU.
Keystone-SDA
03.02.2025, 15:53
SDA
As a strong economic area, it is possible to react to customs policies with customs policies, warned German Chancellor Olaf Scholz. "That is what we must and will do." Luxembourg's Prime Minister Luc Frieden and French President Emmanuel Macron, among others, expressed similar sentiments: "We are no weaker than the United States of America. If someone wants a trade war, they'll get it," said Frieden. Macron emphasized that if Europe is attacked on trade issues, respect must be earned.
Trump: That will definitely happen
Trump had made it clear shortly beforehand that he undoubtedly wants to impose tariffs on imports from the EU. "That will definitely happen for the European Union", Trump said late on Sunday evening (local time) near Washington. However, Trump did not provide any specific details on the amount of the tariffs or the product groups that might be affected. There is no timetable, but it will happen "pretty soon".
According to diplomats, the European Commission under the leadership of Ursula von der Leyen had long ago prepared a list of US products that could also be subject to higher tariffs in the event of new US tariffs against the EU. During Trump's first term in office, the EU responded to new tariffs on steel and aluminum products with special tariffs on bourbon whiskey, Harley-Davidson motorcycles and jeans, among other things.
EU emphasizes willingness to negotiate
Trump is now threatening to impose double-digit additional tariffs on all imports from the EU. The Republican wants to use this to strengthen the USA as a production location and reduce the trade deficit. It is a thorn in Trump's side that European companies sell significantly more goods in the USA than American companies in the EU.
For similar reasons, the US president imposed tariffs of 25 percent on imports from neighboring Mexico and Canada at the weekend - with the exception of energy imports from Canada, which will only be subject to a surcharge of 10 percent. An additional 10 percent will be imposed on all imports from China.
In addition to the threats of retaliatory tariffs, EU leaders also emphasized the EU's willingness to negotiate once again on Monday and pointed out the risks of a possible trade war for the USA. Austrian Chancellor Alexander Schallenberg, for example, warned that China would become the "laughing third party" in the event of a trade war between the EU and the USA.
EU High Representative for Foreign Affairs Kaja Kallas said that transatlantic trade and investment secured more than 16 million jobs on both sides of the Atlantic and accounted for 42 percent of global economic output. "We need America and America needs us," she said.
The EU has therefore been discussing for some time what offers could be made to Trump. For example, it is conceivable that the EU could import more liquefied natural gas (LNG), military technology and agricultural goods from the USA in order to reduce the trade deficit. It would also be possible to reduce import tariffs on US cars.
Trade war threat overshadows other topics at the summit
The actual main topic at the informal summit in Brussels was possible joint initiatives to expand defense capabilities and the question of how necessary investments should be financed. In view of the threats posed by Russia, a number of states are open to taking on new joint debt. However, Germany, the Netherlands and Austria in particular reject this.
Scholz made it clear that, in his view, strict competition rules, for example, could be relaxed in order to increase the performance of the European defense industry. "Companies must be freed from all the legal rules that hinder their cooperation. Countries must be able to enter the purchasing processes of other countries without new purchasing procedures," he said. Less bureaucracy and more determination are needed.
French President Macron emphasized that European industry should be the primary beneficiary of all future investments in order to make the EU strategically independent in the area of defence.
Dispute over defense funding
A possible compromise in the debate on armaments is also seen as the expansion of arms financing by the European Investment Bank (EIB). In addition, a programme is also being discussed in which the EU Commission organizes loans for member states on favourable terms. The Commission also used such a program to support national short-time work schemes during the coronavirus crisis.
Estimates by the EU Commission show the dimensions of the program. Last summer, it already assumed that additional defense investments of around 500 billion euros would be required over the next ten years. Possible EU projects include, for example, a European air defense system and increased security for the EU's eastern land border.