The EU Needs to Rediscover Its Single-Market Compass
A tit-for-tat trade war would hurt both Europe and the US, but internal barriers to trade and the efficient allocation of capital leave Europe ill-prepared.
Tear down those walls.
Photographer: Liesa Johannssen/BloombergGrowth in the euro area has been lagging the US for decades now, with GDP per capita across most of the bloc comparable to the poorest US states. That makes Europe particularly vulnerable to the tariffs threatened by President-elect Donald Trump. Although European Union leaders will be tempted to simply retaliate against US goods, a tit-for-tat trade war helps no one. A better bet is for the EU to get its own house in order.
“We must be clear about the fact that today, our Europe is mortal. It can die,” warned French President Emmanuel Macron earlier this year. He was perhaps exaggerating, but the threat is real. A prolonged productivity slowdown is amplifying Europe’s problems and endangering its priorities. As a recent report from former European Central Bank boss Mario Draghi put it: “This is an existential challenge.”