Two-step trade strategy against Trump scenario in Europe

According to the British Financial Times, if Republican candidate Donald Trump returns to the White House, Brussels will propose a quick deal and then threaten retaliation with tariffs. Brussels is developing a two-step trade strategy in case Donald Trump is elected president again. Accordingly, the EU administration will offer Trump a quick deal if he is elected president for a second term, while aiming to retaliate if he opts for punitive tariffs instead. EU officials see the carrot-and-stick approach as the best response to Trump’s promise of a 10 percent minimum tariff, which they estimate could reduce EU exports by around 150 billion euros a year. Negotiators plan to approach Trump’s team before he takes office if he wins the November elections to discuss which US products the EU could buy in larger quantities. If talks to improve trade fail and Trump imposes higher tariffs, the European Commission’s trade department is preparing lists of imports that could be taxed by 50 percent or more. “We need to show that we are a partner, not a problem for the US. We will seek agreement but we are prepared to defend ourselves if necessary. We will not be driven by fear,” a senior EU official told the Financial Times. Trump’s first term from 2017 to 2021 was painful for the EU, which has a significant goods trade surplus with the US. After Trump imposed tariffs on 6.4 billion euros of steel and aluminium imported from the EU and other countries in 2018 on national security grounds, the EU responded with 2.8 billion euros worth of countervailing duties. Brussels has sought to go after Trump’s core voters in designing the measures, imposing duties on bourbon whiskey, Harley-Davidson motorcycles and motorboats. Those tariffs were suspended until March as part of a temporary deal with the Biden administration to pause the metals tariffs.