How Europeans Should Plan for Trump Trade Salvo

Donald Trump isn’t sure whether Spain is an emerging market or not – he recently asked if it was a “BRICS nation.” But he is sure that tariffs on the European Union are coming “soon,” a threat with added weight now that he has fired his opening salvo against Canada and Mexico — even taking into account a month-long negotiated pause. These would be economically painful, divisive and potentially existential if they split the EU between friend and foe. What, if anything, can Europeans do about it?

The first thing to do is to take Trump seriously. His attack on US neighbors should snap Europeans out of the idea that Trump is full of hot air or that offering early concessions will spare America’s allies. Trump’s presidency is fueled by belief that lifting US prosperity means breaking the chains that bind it monetarily, militarily and commercially to the global system. Tariffs are integral to putting this vision into practice, and close partners are seen as the best source of quick wins and behavioral change (as seen in Mexico and Canada’s negotiated pledges). That makes the EU — seen as a trade distorter, unfair regulator and defense free rider — a juicy target given its trade surplus. Insisting that the US will only harm itself by inflicting tariffs on a $1.3 trillion trading relationship, however accurate, is unlikely to stay Trump’s hand.