Berlin (dpa) – A trade expert warns that the ongoing trade conflict between the USA and the EU may escalate into a significant confrontation with dire implications for Europe. In a scenario paper acquired by the German Press Agency, Laura von Daniels from the German Institute for International and Security Affairs (SWP) asserts, “For the first time since World War II, Americans and Europeans may find themselves not only as economic rivals but as adversaries with fundamentally opposing geopolitical perspectives.”
According to the head of the SWP’s America working group, the trade dispute fueled by US President Donald Trump has considerable divisive potential. The impact of US tariffs is uneven across the EU, affecting export-driven nations like Germany, Ireland, and Italy more profoundly. “If these countries consider entering into individual bilateral agreements with Trump, it could undermine the internal market’s strength and jeopardize the future of the EU.”
Trump’s Security Policy Crossover
Von Daniels also highlights that Trump will likely continue to intertwine economic issues with security policy to sow discord within the EU. “While states on the eastern front view a potential US withdrawal from Europe as a critical threat, other member states regard the security implications as less severe.” This divergence diminishes the EU’s ability to respond collectively to Trump’s threats.
Recently, Trump postponed the deadline for new tariffs to August 1. Earlier, he had set a base tariff of ten percent on nearly all EU imports and imposed special tariffs on certain products such as steel, aluminum, and vehicles. His tariff strategy aims to boost domestic production in the USA. The EU has momentarily suspended proposed counter-tariffs while negotiations are still in progress.
Von Daniels deems a scenario where the USA completely lifts its tariffs as unrealistic, envisioning that the EU would need to make significant concessions. More plausible alternatives exist.
Quick Agreement?
For a swift “deal” with Trump, the EU could agree to a general US import tariff of 10 percent on most goods, while the US might offer fixed quotas for duty-free imports of certain materials, like specific steel and aluminum products.
“From a US viewpoint, an early agreement could showcase a more moderate policy to financial markets,” the expert notes, considering the USA’s rising credit risks and a weakening dollar. However, she cautions: “For the EU, there is a notable risk that any deal with Trump could be short-lived.” Additional US tariffs on specific sectors are anticipated in the fall.
“This creates the worry that the EU signals to Trump a tendency to yield under pressure in the future,” warns von Daniels. An early agreement would merely serve as an “economic policy ceasefire,” buying time and instantly alleviating high escalation costs.
Potential Consequences
In a second scenario, von Daniels foresees continued negotiations without resolution, leading to increased costs from existing tariffs. Trump is expected to exert pressure on the EU through security-related provocations, which could fracture the EU’s initially united front over negotiation strategies.
Lastly, in the third scenario, a full-blown trade and economic war between the USA and the EU may erupt, with von Daniels not ruling out that Trump could further pressure NATO by withdrawing US troops from Europe beyond current expectations in security circles.
The EU’s potential countermeasures, which could impact digital services and property rights, might be countered by Trump with financial sanctions, a cessation of liquefied gas supplies, or export restrictions on US software.
What Trump’s true objectives are remains ambiguous to trade partners, notes von Daniels. It is evident: “The EU and Germany, being the most economically significant member state and political powerhouse, must brace for the possibility of a failed agreement.” (July 9)
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