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Trump tariffs on EU goods herald fresh trans-Atlantic tensions

The Trump administration seems bent on not just weakening, but breaking up the Brussels-based club.

US President Donald Trump threatened this week to impose tariffs worth US$11.2 billion on European Union (EU) goods. Last summer's supposed trade deal between him and European Commission chief Jean Claude Juncker now rings hollow.

DONALD Trump threatened this week to impose tariffs worth US$11.2 billion on European Union (EU) goods. The move would significantly escalate economic and political tensions between the world's biggest trading blocs and underlines the hollowness of the supposed trade "deal" agreed on last July between Mr Trump and outgoing European Commission President Jean-Claude Juncker.

And the move comes at an increasingly difficult moment for world trade, which is slowing partly because of concerns over Mr Trump's protectionist policies. Washington has already imposed tariffs of 10 per cent on US$200 billion of Chinese imports in a dispute with Beijing, although the two sides have yet to agree on a new deal this spring.

On the EU front, Mr Trump's US trade representative Robert Lighthizer announced on Monday a list of goods which could be hit by tariffs in retaliation for EU subsidies to Airbus, the European aerospace manufacturer. This four-page list includes French cheese, wine, champagne, olive oil and seafood such as oysters, plus aircraft.

The latest spike in tensions emanates from a long-running dispute between Airbus and Boeing, the two major civil aerospace operators, which have been at the centre of a tit-for-tat battle over subsidies by their respective governments. Mr Lighthizer said on Monday that "this case has been in litigation for 14 years, and the time has come for action", while EU officials have reportedly started to prepare retaliatory measures in relation to subsidies given to Boeing by the US government.

While the proposed US tariffs are very small as a percentage of the overall US-Europe trade, they are probably a US negotiating tool to set the tone for wider, important negotiations to come, including in the auto sector. What this underlines is the fragility of the trade "deal" agreed by Mr Trump and Mr Juncker last summer, which while calming trans-Atlantic tensions at that time that had boiled over at the rancorous G7 and Nato summits, was highly prone to reversal.

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The understanding then brokered between Washington and Brussels was to work to resolve their current economic dispute, which had threatened last year to descend into a trade war. The core of the Summer 2018 agreement was a commitment to "work together toward zero tariffs, zero non-tariff barriers and zero subsidies" on non-car goods.

Welcome as the immediate de-escalation of tensions was then, question marks hung over the deal from Day One and it was an open question whether the ambitions would be realised, despite Mr Trump's claims that the agreement was a "great day for free and fair trade". Part of the reason that many suspected the new accord could fall down is the mercurial nature of the US president, whose diplomatic disdain for the EU goes significantly beyond that of any his predecessors in the White House.

Indeed, following his latest gambit, US-EU tensions could easily resurface, given that the Brussels-based club appears to be a deep source of frustration for the billionaire. Last summer, shortly before Mr Juncker's visit, the US president remarkably declared: "I think the EU is a foe, what they do to us [the United States] in trade."

While some dismissed this remark as just another spur-of-the-moment presidential outburst, Anthony Gardner - who served as US Ambassador to the EU under Barack Obama - warned at the time that "Europe (needs to) wake up: the US wants to break up the EU ... Remember Belgium's motto, L-union fait la force (Unity creates strength)".

The contrast here between Mr Trump - with his calls for more "Brexits" within the EU - and US policy at the start of the European integration process could not be starker. Embodied in John Kennedy's 1962 Atlantic Partnership speech, the core US view then was that a united Europe would make future wars in the continent less likely; it would also create a stronger partner for the US in meeting the challenges posed by the Soviet Union, and offer a more vibrant market for building trans-Atlantic prosperity.

Yet, US attitudes have gradually become more ambivalent as integration deepened, particularly in recent Republican administrations. In the economic arena, for instance, the drive toward the European Single Market led to US concerns about whether this would evolve into a "Fortress Europe". Similarly, the creation of the European monetary union prompted worries about the dilution of US primacy in the financial sector and macroeconomic policy. Moreover, in competition policy, the increasing assertiveness of the European Commission has periodically raised US concerns about EU over-reach.

Prior to Mr Trump, the George W. Bush administration came closest to questioning the value of European integration. For instance, in the controversy over the Iraq conflict, Washington queried the benefits of EU collaboration in the security and defence arena. On the eve of the Nato defence review in 2003, US Defence Secretary Donald Rumsfeld even drew a distinction between "old" and "new" Europe, with the latter perceived as more favourable to US interests.

However, while the Bush team eventually recognised the need to draw back from this approach, it appears Mr Trump may not be willing to do the same, and has indeed raised the rhetoric several notches. In so doing, one of the features of the current president's approach last year was an incredible attempt to try to prise apart Germany and France, the traditional two motors of EU integration.

Last May, it was reported that Mr Trump advised Emmanuel Macron that France would be better off quitting the EU to get a better trade deal with Washington than the United States is willing to offer the EU as a whole. This remarkable suggestion comes in the context of the US president's denunciation of Germany, which he has called "very bad" because of its significant trade surplus with the United States.

While the White House's gambit in trying to split Germany and France is most unlikely to succeed, it underlines the fact that US ambivalence about European integration has reached its apotheosis under Mr Trump. The US president remains the first US head of state in history who appears to want to not just weaken, but also splinter, the Brussels-based club, and Monday's proposed tariffs could be the opening salvo in a new period of increased trans-Atlantic tensions.

  • The writer is an associate at LSE IDEAS at the London School of Economics.

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