Europe’s Trade Strategies Ahead of a Trump Administration: Key Insights
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Dear readers, good Sunday afternoon!
In today’s edition:
- Europeans start mulling their trade options for Trump
- Germany hesitates on Taurus, France hesitates on EPF funds
As Trump prepares for another term, EU states consider trade strategies.
EU trade ministers discussed future trade ties this week. Trump won re-election, promising 20% tariffs on EU goods. Outgoing Trade Commissioner Valdis Dombrovskis suggested a positive approach, encouraging ministers to avoid reopening old disputes.
Trump has warned of a “big price” for Europe’s trade surplus. If tariffs are enacted, EU diplomats are prepared to respond swiftly. Discussions on potential positive offers are underway, focusing on mutual benefits. A diplomat stated, “Proposing something positive leads to better negotiations.”
Potential trade options include increases in energy imports and defence goods. European Commission President Ursula von der Leyen proposed buying more US liquefied natural gas (LNG) to deter new tariffs, noting that US LNG prices could help reduce EU energy costs.
In 2024, the US provided 48% of the EU’s LNG imports, compared to Russia’s 16%.
Other possible trade discussions may involve agricultural products like soybeans. Diplomatic talks could also include acquiring more US military equipment. However, some officials express concern. “Buying more arms from the US contrasts with our goal of strategic autonomy,” one diplomat noted.
Meanwhile, some EU members advocate for clarity on what is essential for strategic autonomy, suggesting a focus on key sectors such as defense.
Policy discussions are shifting. Christoph Mikulaschek from Harvard predicts a more transactional US-EU relationship. Europe may need to increase its share of aid and defense spending to maintain US commitment, especially regarding NATO funding.
EU diplomats also anticipate alignment with the US on future China policies, as the bloc’s stance towards Beijing has already toughened.
Despite these discussions, EU officials stress that concrete offers will come after Trump takes office, encouraging readiness for new negotiations. “Thoughts are important, but timing is key,” one diplomat said.
NO TAURUS I: Germany continues to rule out delivering long-range Taurus missiles to Ukraine despite US approvals for Ukraine’s use of long-range weapons.
NO DEFENCE BONDS I: Germany and Poland disagree over claims that the largest EU countries support creating European defense bonds to compensate for potential reductions in US support for Ukraine.
HALF-ACHIEVEMENTS I: By 2025, Europe plans to send over one million rounds of ammunition to Ukraine, according to Josep Borrell, the outgoing top diplomat. New goals are also in discussion for direct investment in the industry.
EPF LATEST I: France hesitates over plans to bypass Hungarian blockages for reimbursing military aid to Ukraine through the European Peace Facility.
PESCO REFORM I: EU defense ministers have reformed PESCO to coordinate better with Ukraine and focus on critical programs.
GOOD YEAR I: Europe’s defense industry has performed well but calls for increased government funding to support long-term production goals beyond immediate wartime needs.
WHAT ELSE WE’RE READING
ON OUR RADAR NEXT WEEK
- EU chief diplomat Borrell concludes Middle East trip| Sunday, 24 November 2024 | Beirut, Lebanon
- Germany hosts defense counterparts from France, Britain, Poland, and Italy| Monday, 25 November 2024 | Berlin, Germany
- G7 Foreign Ministers meet| Mo-Tue, 25-26 November 2024 | Fiuggi-Anagni, Italy
- European Parliament session| Mo-Thu, 25-28 November 2024 | Strasbourg, France
- New parliament convenes for its first session after contested elections| Monday, 25 November 2024 | Tbilisi, Georgia
- Ukraine’s NATO ambassador meets counterparts on Russia’s hypersonic missile strike| Tuesday, 26 November 2024 | Brussels, Belgium
- European Parliament votes on European Commission confirmation| Wednesday, 27 November 2024 | Strasbourg, France
- Nordic-Baltic Summit| Wednesday, 27 November 2024 | Hapsund, Sweden
- Global Alliance for the Implementation of the Two-State Solution working group session| Thursday, 28 November 2024 | Brussels, Belgium
- Handover between outgoing European Council President Charles Michel and incoming Antonio Costa| Friday, 29 November 2024 | Brussels, Belgium
- New European Commission, European Council President Costa and EU top diplomat Kallas take office| Sunday, 1 December 2024 | Brussels, Belgium
[Edited by Rajnish Singh]