DAVOS, Switzerland — After years in which trade deals just kept slipping away, all the European Union needed was the shock of Donald Trump’s return to the White House to get its act together.
Chief executive Ursula von der Leyen and her trade czar Maroš Šefčovič haven’t merely hung about. They moved fast after Trump’s election triumph in November to close out deals that have been stuck in the works for years — even decades — and want to build new relationships to compensate for his threats to throw up a tariff wall around the United States.
“Europe will keep seeking cooperation — not only with our long-time like-minded friends, but with any country we share interests with,” von der Leyen said in a keynote address at the World Economic Forum Tuesday, less than 24 hours after Trump was sworn in on Monday.
In her first term, von der Leyen’s Commission sought to attach human rights and green conditions to trade deals — which proved to be more than its partners were prepared to take. As a result, a trip in late 2023 to seal a Latin American trade deal was called off at the last minute. Another, with Australia, collapsed after EU bigwigs flew around the world for a signing ceremony that never happened.
The setbacks exposed von der Leyen’s lofty first-term trade aspirations as unrealistic. A shift in mindset has been on full display in the weeks leading up to Trump’s inauguration.
“My view from the last two months, and I think it was also very clearly confirmed here in the last two days in Davos, is that there is enormous interest in accelerating free trade negotiations with the European Union,” Šefčovič told POLITICO at the World Economic Forum when asked in an interview whether he perceived a shift in the EU’s trade policy.
Trump hasn’t yet followed through on his campaign threats to impose universal tariffs of 10 to 20 percent on the rest of the world — and more for Canada, Mexico and China. But the mere prospect has had a galvanizing effect.
“Trump does — unintentionally — help to facilitate trade agreements between the EU and third parties. You can see there is a change of mind, a certain new dynamic,” said an EU diplomat who, like others in this story, was granted anonymity to speak candidly.
Reality check
After two decades of back-and-forth on Mercosur, a South American trade bloc, the European Commission sealed a political deal in early December. In one major concession, it agreed that parties can seek compensation over losses arising from strict EU regulations, such as one aimed at curbing deforestation. This so-called rebalancing mechanism was a first for an EU trade deal, said a senior EU official.
Similarly, just three days before Trump’s inauguration, Brussels finally agreed to upgrade its trade deal with Mexico. The talks had floundered for years — but Trump’s tariff threat on Mexico encouraged the two sides to display a united front.
In its rush to get the agreement over the line, Brussels admitted it was “less ambitious” than previously envisaged. If other trade partners would swoop in and do deals with Mexico, it could put the EU “in a worse position” for the future, a second EU official said.
The alacrity from Brussels on updating the Mexico accord appeared to have caught that country’s president, Claudia Sheinbaum, by surprise. “The work continues, and there is still no agreement. Everything must align with our plan,” she said at a press conference on Friday.
EU officials have since sought to clarify that the deal had been agreed at the political level, though the legal text still needs to be finalized.
In other trade wins, the EU has deepened and widened its agreements with Switzerland, and relaunched talks on a trade deal with Malaysia after a decade-long hiatus. Von der Leyen plans to lead her entire College of Commissioners on a mission to India next month in search of a strategic partnership pact and progress in their long-running, but slow-moving talks, on a trade deal.
Spoiling the party
One damper on the EU’s free-trade ambitions has been a deep rift between its two biggest economies, France and Germany, which don’t see eye to eye on many trade files. That includes Mercosur or the Commission’s tougher line on China, which has resulted in duties on electric vehicle imports.
Going in to bat for his country’s exporters, Friedrich Merz — Germany’s likely next chancellor — wants the EU to move faster to boost trade. In a campaign speech Thursday, he called for Brussels to do EU-only trade deals that can be fast-tracked, skipping the need for ratification by all 27 member countries.
Merz, whose Christian Democrats are on course to win a snap election in late February, is also speaking freely about how best to avoid a tariff war with the United States. And he’s calling to revive talks on a transatlantic free-trade deal that fell apart nearly a decade ago.
That won’t go down well with French President Emmanuel Macron, who over the past year was politically weakened by election defeats and has presided over four different governments. Macron is lacking a stable majority in a parliament that is unanimous on one point: Its opposition to free trade.
Which brings von der Leyen and Šefčovič back to the biggest trade challenge that they will face: Trump’s tariffs — when they do finally materialize.
João Vale de Almeida, a former EU ambassador to Washington, has some advice on how to handle him.
“We need to engage early, but not in a needy way. We should not be a demandeur,” Almeida told a panel hosted by the European Policy Centre, a Brussels think tank. “We need a combined offensive and defensive agenda.”
Nicholas Vinochur, Jakob Weizman and Douglas Busvine contributed reporting.
The post As Trump returns, the EU rediscovers the art of the trade deal appeared first on Politico.
