Media: EU gears up for Trump's return amid looming trade war concerns

The return of Donald Trump to the US presidency is sending shockwaves through the European Union (EU), which is now preparing to tackle the prospect of a new trade war and the potential for heightened transatlantic tensions.

Trump’s campaign promises, including tariffs on foreign imports and a harder stance on China, have raised alarm in European capitals, where leaders are already strategising ways to safeguard the EU’s economic interests, Caliber.Az reports per foreign media.

Trump’s earlier term saw the imposition of a 25 per cent tariff on steel and 10 per cent on aluminium, under the pretext of national security concerns, a policy that caused significant disruption to international trade.

Now, as he secures a second mandate, EU officials are concerned that a new wave of protectionist measures could escalate the trade conflict, especially with key EU industries like automotive manufacturing and steel at risk. Trump has singled out Germany in particular, often targeting the country's auto exports as a point of contention, which has only added to EU leaders' anxieties ahead of his return to office.

In a bid to address these challenges, European Commission President Ursula von der Leyen extended an olive branch to Trump, urging continued transatlantic cooperation. “Let us work together on a transatlantic partnership that continues to deliver for our citizens,” she said, emphasizing the importance of the economic relationship between the EU and the US, which supports millions of jobs on both sides of the Atlantic.

However, this call for collaboration comes against a backdrop of growing unease among EU policymakers about the potential consequences of Trump's trade policies.

French President Emmanuel Macron and German Chancellor Olaf Scholz have been quick to discuss the need for a united EU response to the new reality under Trump. Macron has already expressed a commitment to strengthening Europe’s sovereignty while working with the US to defend shared values and interests. His sentiments were echoed by Scholz, as the two countries seek to present a front of unity in anticipation of future challenges.

The prospect of a trade war, however, is a significant concern. According to trade experts, Trump's return could mean the re-emergence of tariffs similar to those seen in 2018, which were not only damaging to the EU but also to the US economy.

The Federation of German Industry (BDI) has warned that such measures could cause widespread economic harm. Analysts at the Kiel Institute for the World Economy estimate that new trade disruptions could result in a 0.5 per cent decline in EU GDP, with German output facing a potential 3.2 per cent contraction.

Some experts believe that there are potential opportunities for the EU as well. The ongoing shift in global trade dynamics, particularly concerning China, could align the EU with Trump's stance against Chinese exports.

Both Trump and von der Leyen have expressed concerns over China’s market practices, potentially opening the door for cooperation on addressing the glut of cheap Chinese imports. In this context, Brussels is emphasising its readiness to defend its economic interests more robustly than during Trump’s first term.

“Brussels is far better prepared this time around,” said Bernd Lange, a senior member of the European Parliament’s international trade committee. He highlighted that the EU has strengthened its trade defence mechanisms, ready to respond swiftly to any unjustified tariffs imposed by the US. A similar sentiment was expressed by Karl Tachelet, representing European steelmakers, who warned that overcapacity in global markets, particularly from China, has worsened since Trump’s first term.

In the short term, the EU faces an immediate challenge in resolving the dispute over steel and aluminium tariffs, which remains unresolved despite the Biden administration’s more EU-friendly approach. With a truce on retaliatory tariffs set to expire in March 2025, the EU is hoping that the looming deadline will prompt Trump to the negotiating table to avoid a full-blown trade war.

As the EU prepares for a potentially rocky road ahead, it is clear that Brussels will need to navigate this new era of transatlantic relations with caution, balancing the desire for cooperation with the need to defend its economic interests.

By Aghakazim Guliyev