Since Trump arrived at the White House, transatlantic relations have been on a rough path.
The President of the U.S. only recently mitigated the painful trade war with China, after confirming the Phase 1 trade deal with the People’s Republic.
Now Europe is his next target, emphasized by the US imposition of tariffs on European exports of aluminium and steel earlier. keyboard_arrow_down
Trade talks between the U.S. and European Union are on still stand.
European Commission President von der Leyen and Trump want to change that and finally negotiate on an EU - U.S. free trade deal.
However, Trump already started threatening the EU to assess huge tariffs on European cars, if the two parties don’t negotiate on a trade deal in the near future.
The encounter of von der Leyen and Trump:
At the World Economic Forum in Davos, the new European Commission President and the U.S. President encountered for the first time. Ursula von der Leyen concluded she is “looking forward to working with President Trump on the opportunities and challenges ahead of us.” Her team further described the meeting as “a friendly exchange of views between allies” to “compare notes and positions on a number of topical issues, notably on trade, technology and energy.”
Trump said to von der Leyen, he had heard about her reputation of being “a tough negotiator” and that this “is bad news for us because we’re going to talk about a big trade deal.”
On Monday, Trump told U.S. governors that he was reconsidering his sights on the trade relationship with the EU.
Further, Trump tweeted about the EU: “Europe has been treating us very badly.” He continued: “Over the last 10, 12 years, there’s been a tremendous deficit with Europe. They have barriers that are incredible ... So we’re going to be starting that. They know that.”
What is the EU's answer to Trump's threat?
European officials announced to negotiate with Trump about potential disagreements in the trade relationship, but also warned the U.S. they will reciprocate against the U.S. as soon as Trump decides to impose tariffs on cars or other products.
“The European Union tried to gain some time, and had Washington focused on Beijing, but now we are on the menu ahead of the presidential election,” said Elvire Fabry, a trade expert at the Institut Jacques Delors in Paris.
“Trump will expect to have some new scalps to show from the European side.”
Trump seeks reelection in November 2020 and proved in the past that he is willing to use rough methods.
“In the economic realm, we’re evenly matched. And we will defend ourselves,” Norbert Roettgen, a senior German conservative lawmaker, said on Friday after meetings with White House and State Department officials.
Trump is boosted by his relative success in browbeating Canada and Mexico to renegotiate parts of NAFTA (North American Free Trade Deal).
Additionally, the President forced China, with the use of his tariffs, to repeat some promises of reform and promise to buy more U.S. goods in Phase one trade deal, which assured him to use the same approach on the European Union.
However, there are important differences between China and the EU in trade deal negotiations, since the EU was always an ally to the U.S. and not competitor, like China.
Since Trump's actions demonstrated to be unpredictable, one can only guess how harsh the President will react to possible trade irritants in the USD 1 trillion trade relationship with the EU.
Possibly effected stocks by U.S. - EU trade tensions: