Trump’s trade deal with the EU: a marriage of convenience or a recipe for disaster?

When one thinks of thinks of US President Donald Trump, one most probably instantly associates the politician with the infamous campaign slogan which won him the 2016 presidential election, “Make America Great Again”. Not that much time would pass before the whole world got a taste of the message behind Trump’s campaign being put into practice , when it came  to the ‘ America First’ mentality of the Trump administration , and one can see this being transcribed into reality with regards to the isolationist and protectionist approach of this presidency.


To start off with, the developments which took place in relation to trade between the US and Europe have their beginnings in reports which stated that the Trump administration was planning on introducing tariffs on steel and aluminium products imported from the EU in May 2018.  The tariff’s consisted of a 25% tariff on imported steel and a 10% tariff on imported aluminium, which were introduced as an attempt to address the trade in-balance between the US and the EU and an opportunity for the US to gain trading concessions as a result of this. The EU was expected to immediately respond by retaliating, which it did in the following month of June, by introducing a 25% tariff on American products ranging from peanut butter and Harley Davidson motorcycle’s ,  and another 50% on select items such as footwear and items of clothing.  Taking all these measures into consideration, it seemed extremely likely that the stage was set for an all-out trade war between the US and the EU. Both sides seemed confrontational with one another, all until an unexpected development in July, where the President of the European Commission, Jean – Claude Juncker visited Washington D.C. and had a meeting with President Trump at the White House.

The agreement reached seemed to prevent all possibilities off a trade war taking place between the US and the EU.  The deal reached consisted of both the United States and the European Union agreeing to remove trade barriers, working toward zero tariffs and zero non-tariff barriers as well as committing towards zero subsidies on non-auto industrial goods.  The EU now wishes to import more soybeans from the US, together with liquefied natural gas (LNG) from the US so as to diversify its energy supply, while both sides noted that the US and the EU have one of the largest economic relationships in the world, with a $1 trillion bilateral trade relationship existing between both of them. The US and the EU also agreed to engage in a closer dialogue with regards to standards on how to ease trade restrictions and bureaucratic obstacles. The agreement also touched upon safeguarding European and American companies from unfair practices in global trade, and in relation to this, work with partners to reform the World Trade Organisation (WTO) with regards to its unfair trading practices.  All these objectives have been planned to be pushed forward by an ‘Executive Working Group’, which has been established as a result of this agreement and will consist of close advisors from both sides.

Together with all these measures being announced, President Trump made clear that the US won’t be placing another 25% tariff, this time on European cars being exported to the US, as he had previously threatened to do. However, the initial tariffs’ which Trump placed on aluminium and steel from Europe are now up for negotiation, and European Commissioner for Trade, Cecilia Malmstrom, had warned that should the negotiations fail , the EU would place $20 billion worth of more retaliatory tariffs on US goods.  For now, one can say that no more economically aggressive measures will be taken from either side in this trade relationship, but a lot of importance hinges upon how upcoming trade negotiations will progress and what they will lead to , in order to determine that pledges written down on paper turn into an actual reality.


From all this , it’s easy for one to conclude that all the economic tension between the EU and the US has passed , but it’s even more simple to say that this is just the calm before the storm. Only time will tell how events continue to unfold, with a lot hinging upon the turnout of negotiations between the US and the EU.  These will determine whether a prosperous future is in store or not or whether a trade war will ensue, since a for-granted conclusion on this matter is too premature to make.

Written by: Jacob Callus


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