Donald Trump likes to make offers. And he could also be calculating that his sudden escalation of tariffs on the EU will squeeze Brussels into making large concessions as he opens a brand new entrance in his international commerce warfare.
However it’s a dangerous wager. Though commerce talks between the US and the EU had been transferring slowly, Trump’s risk to place 50 per cent tariffs on all imports from the bloc from June 1 has raised the financial and diplomatic stakes dramatically.
The transfer threatens to jeopardise a latest restoration in international fairness costs triggered by Trump’s tilt in the direction of dealmaking and de-escalation with different buying and selling companions, together with the UK and China. It might additionally additional injury strained transatlantic relations.
The gamble displays the frustration of the president and his prime officers with what they view because the EU’s obstruction within the negotiations — and a perception that Brussels will concede first or endure greater than the US if there is no such thing as a deal.
“It’s a classic Trump bullying tactic, it’s what he does. If he doesn’t get what he wants, he pushes back and makes more threats, and then he waits to see what happens,” mentioned Invoice Reinsch, a commerce coverage skilled on the Heart for Strategic and Worldwide Research in Washington.
“It’s intended to get the Europeans to back down — my reading of them is that they won’t,” he added.
Within the Oval Workplace on Friday afternoon, Trump insisted he wasn’t searching for a fast settlement with Brussels, and vowed that the 50 per cent tariffs would take impact on June 1 as deliberate. “That’s the way it is,” he mentioned.
US Treasury secretary Scott Bessent instructed Fox Information that the aim of the deliberate tariffs was to “light a fire under the EU” — suggesting that there was some leeway for negotiations earlier than or after the June 1 deadline.
However the brinkmanship creates uncertainty, warn economists. “The proposed tariffs on the EU highlight a key forecast risk, whereby tariffs remain an ongoing tool to be wielded by the Trump administration whenever negotiations hit a snag. Repeated tariff threats and rollbacks will keep policy uncertainty elevated,” consultancy Oxford Economics wrote in a word on Friday.
Washington’s exact calls for on Brussels are unclear. In his social media submit on Friday, Trump rattled off his dissatisfaction with many elements of EU tax, regulatory and commerce coverage that may be exhausting to deal with rapidly.
Commerce consultants in Washington say the administration is annoyed that the EU’s gives are not any completely different from these it has made to the US prior to now.
“Normal methods of diplomacy and traditional approaches to trade negotiations have not resulted in a US-EU trade agreement by any administration. So I’m not surprised to see the president take a very different tack with the EU,” mentioned Kelly Ann Shaw, a former White Home official throughout Trump’s first time period, and a companion in worldwide commerce coverage at legislation agency Akin Gump.
“These threats of much higher tariffs do create an action forcing event, where the two sides are either going to come to an agreement or they aren’t,” she added.
“The American point of view is that the Europeans don’t understand that this time is different, and it’s not a conventional negotiation,” mentioned Reinsch at CSIS.
On Friday, EU commerce commissioner Maroš Šefčovič spoke with US commerce secretary Howard Lutnick and commerce consultant Jamieson Greer, however there didn’t seem like a breakthrough.
“EU-US trade is unmatched & must be guided by mutual respect, not threats. We stand ready to defend our interests,” Šefčovič wrote on X after the discussions.
EU officers chafe at Trump’s calls for, questioning why the world’s greatest buying and selling bloc ought to supply unilateral concessions.
They argue that there’s solely a couple of 1 share level distinction between EU and US tariffs and say that worth added tax is roughly equal to US gross sales tax.
Brussels can also be reluctant to offer the US market entry denied to different nations, which might breach World Commerce Group guidelines.
Officers additionally level out that whereas commerce coverage is dealt with by the European Fee, most of the limitations the US has points with are nationwide.
“EU negotiators should hold their nerve. It certainly signals Washington’s edginess and impatience to get a deal,” mentioned Georg Riekeles, affiliate director on the European Coverage Centre in Brussels.
Riekeles urged the EU to repeat Canada and China by retaliating strongly. “If the EU is ready to fight back, US bullying and escalation is ultimately so self-harming that you can enter deal territory.”
Nonetheless, nations reminiscent of Eire and Italy, which depend on US exports, have lobbied exhausting towards robust countermeasures — and Trump can be relying on schisms inside the bloc to pressure the EU’s fingers.
However Michael Good, a former Democratic congressional commerce counsel at Rock Creek World Advisors, a consulting group in Washington, warned that “if Trump’s plan is to divide the bloc, it likely will have the opposite effect”.
Most member states have to date backed the fee’s method of participating however consuming up time, believing that ultimately Trump will again down due to the injury his tariffs will inflict on the US financial system. They’ve indicated that Brussels is minded to face agency.
“One of the reasons markets have calmed down is that they have already factored in more concessions from Trump,” mentioned one EU diplomat.
“We don’t make policy decisions on the basis of tweets, at least not on this side of the Atlantic,” mentioned one other.
