On Friday, in an early morning social media post, U.S. President-elect Donald Trump issued a clear threat to the European Union: make up for the “tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way.”
This builds on Trump’s broader frustrations with Europe. In a recent interview, he accused the European Union of taking “advantage of us on trade … like terrible: They don’t take our cars; they don’t take our food product; they don’t take anything. It’s a disgrace.” There is a real danger he will hit Europeans with blanket tariffs on day one of his second term to correct what he thinks is an unacceptable trade deficit ($131 billion in 2022).
On Friday, in an early morning social media post, U.S. President-elect Donald Trump issued a clear threat to the European Union: make up for the “tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way.”
This builds on Trump’s broader frustrations with Europe. In a recent interview, he accused the European Union of taking “advantage of us on trade … like terrible: They don’t take our cars; they don’t take our food product; they don’t take anything. It’s a disgrace.” There is a real danger he will hit Europeans with blanket tariffs on day one of his second term to correct what he thinks is an unacceptable trade deficit ($131 billion in 2022).
Europeans have just a month to clinch a deal to prevent an all-out trade war between the United States and Europe. This effort should go beyond oil and gas and put a joint approach to dealing with the risks posed by China at the center. In his own interest, Trump would be well advised to give proposals by European Commission President Ursula von der Leyen a hearing. The alternative would be to launch a trade war against Brussels—and thus empower Europe’s pro-Beijing voices.
History suggests any effort by Europe to partner with the Trump administration will be an uphill battle. In April 2018, French President Emmanuel Macron approached Trump with an offer: “Let’s work together, we both have a China problem.” According to a media report, Trump responded that the EU is “worse than China” and continued with a rant about Germany and cars. A trade escalation was only avoided a year into Trump’s first term when then-Commission President Jean-Claude Juncker—who went out of his way to invite Trump golfing—made a promise to buy more soybeans and liquefied natural gas.
Juncker and Trump seemed to share a personal chemistry—a chemistry that von der Leyen may not be able to match. But Trump should nevertheless consider how she has developed a notably ambitious agenda on one of his own policy priorities, namely getting serious about the threats China presents to Europe’s prosperity and security.
On trade, the European Commission has pursued a record number of investigations into unfair Chinese practices under her leadership. Against the will of powerful member states such as Germany, von der Leyen, for example, pushed through tariffs to respond to unfair competition from Chinese electric vehicle makers. Even with regard to the World Trade Organization (WTO), there is a growing reassessment in parts of the commission on China policy. “Within the WTO, where we can. Beyond the WTO, where we must,” is an emerging formula based on the realization that the WTO was not conceived to deal with a gigantic authoritarian state-capitalist economy in its midst. These steps clearly indicate the broader shift of thinking on China in Brussels, even if they do not directly amount to an alignment with U.S. priorities.
The “de-risking” agenda championed by von der Leyen has reflected an overdue reassessment of the vital security interests involved in managing relations with an increasingly authoritarian and internationally aggressive China. Von der Leyen’s commission has pushed for assessments and tools to address Europe’s critical supply chain dependencies as well as infrastructure vulnerabilities. It has also driven the political debate across member states by launching the European Economic Security Strategy, which explicitly covers these aspects.
Of course, despite von der Leyen’s efforts, in many respects Europeans have fallen short of what is necessary. It has been hugely frustrating for the Biden administration that most European leaders long hesitated to address the role of Chinese companies that violate Europe’s core security interests by greasing the Kremlin’s war machine, while entertaining illusions about China’s role as a mediator. Only in its 15th sanctions package adopted in mid-December did the EU start to impose somewhat serious sanctions on some Chinese actors supplying drone and microelectronic components to Russia.
Despite mentioning tech leakage in their high-level Economic Security Strategy, Europeans also never truly got on board regarding the central bipartisan motivation in the United States for de-risking, namely the effort to contain China’s military modernization by restricting access to cutting-edge technologies. Despite key global providers of advanced semiconductor manufacturing equipment being located on the continent, European governments only engaged with the U.S. export control agenda when pressured to do so bilaterally, ultimately resulting in an alignment of Dutch controls with the United States in September. European states still have not fully pushed Huawei out of critical 5G infrastructure. And if it were up to Germany, Europe would continue to act as the sponge for Chinese industrial overcapacity, throwing Chinese President Xi Jinping’s ailing economic model a lifeline.
Yet, when deciding how to approach trade issues with Europe, Trump and his team should look beyond the understandable frustration with what they see as a “too little, too late” China policy. Trump has a crucial choice to make. If he decides to impose across-the-board tariffs on Europe, he will pull the rug out from under the feet of von der Leyen and empower the pro-Beijing voices across Europe. The commission will have no other choice but to adopt a trade war footing with the United States, implementing and adjusting retaliatory measures. Most of the commission’s trade and economic officials who have spent their time dealing with the challenges posed by Beijing will need to be reassigned to deal with Trump’s tariffs.
The commission will have no other choice given the manpower shortage and the importance of the U.S.-European economic relationship. Pro-Beijing voices such as Hungarian Prime Minister Viktor Orban will be ascendant in European debates, and domestic political pressure to give in to the Chinese “charm offensive” seeking to reinvigorate cooperation will also mount, especially in export-dependent countries such as Germany. Decisive action on China, however much in the EU’s ultimate interest, would be much less likely.
If Trump chooses to give negotiations with von der Leyen and other EU leaders a chance before unleashing tariffs, he might achieve a decent deal on trade and push Europe on a more forceful trajectory vis-à-vis Beijing. Negotiations would empower officials such as von der Leyen to push member states to accept de-risking measures on critical technologies—where it will hurt but where action is ultimately in Europe’s interest.
Stopping the European contribution to Chinese military modernization would be one of the most effective steps to preserve peace. Beijing is less likely to resort to force if it feels its forces are not on par with those of the United States and allies. The notion that the same degree of deterrence could be accomplished through the threat of sanctions in the event of an actual escalation strains credibility, especially as long as Europe remains so vulnerable to Chinese economic coercion itself—a lesson that the continent should have learned the hard way from Russian President Vladimir Putin in February 2022.
Despite frequent and often justified self-flagellation on being technologically behind, Europeans also have serious options available in this regard. While some key steps on semiconductor manufacturing tools have now been taken, Europeans can do more to hinder Chinese efforts to replicate critical capabilities, for example by tightening controls around important components as well as inbound and outbound investment screening. It would be about time for Europe to get on the front foot by actively advancing its risk assessment and proposing sensible steps in other critical areas such as biotechnology. While Europeans should certainly keep a critical eye on effectiveness, unintended consequences, and unnecessary collateral economic damage of any measures, they need to get out of the mode of only reacting to U.S. initiatives when their impact on Europe is becoming painfully obvious.
In this vein, Europeans could also discuss with Trump a joint approach to standards on internet-connected vehicles. The Biden administration is about to announce final rules that will ensure Chinese-made EVs and key hardware and software are kept out of the U.S. market on security grounds. It would be very much in the U.S. interest for the EU (as one of the world’s largest single markets) to adopt similar regulations to avoid forcing itself into the position of a technological island on e-mobility while China continues to be a research and development and production hub for the rest of the world. Again, for Europeans, this is not a matter of doing the United States a favor but also of addressing a real vulnerability to sabotage and espionage and ultimately to avoid contributing to the vibrancy of Chinese commercial R&D toward autonomous vehicles—another technology with obvious dual-use potential.
Lastly, while the EU is in a more vulnerable position than during Trump’s first term, due to the war on its doorstep and an economic malaise in many key countries, it does have leverage to hit back at the United States during a trade war. Like last time around, tariffs could target products from Republican strongholds. This shows that it is ultimately also in the self-interest of a self-centered individual such as Trump to use U.S. leverage to cut a favorable deal with the EU rather than pushing the continent closer to Beijing. Von der Leyen might not be Trump’s favorite type of politician, but he will not find a European leader more aligned with the U.S. approach on China. He would do well to invite her to Mar-a-Lago to discuss.
The post Europe Is Ready to Team Up on China—if Trump Is appeared first on Foreign Policy.
