Who will win the EU-US commerce struggle? – DW – 03/13/2025 | EUROtoday

The commerce tensions between the EU and US ratcheted up this week when Brussels introduced €26 billion ($28 billion) of tariffs on US items in response to the Trump administration’s 25% levies on metal and aluminum.

Cecilia Malmström, who served as EU Commissioner for Trade throughout the first Trump administration, sees the alternate of tariffs as “definitely an escalating conflict” and maintains that any query of “either side winning” basically misunderstands the character of commerce wars.

“It’s a lose-lose game,” she advised DW, including that those that would stand to lose most are customers and unusual folks as a result of costs get greater, affecting inflation, jobs, and progress.

She described the “big golden age that tariffs will bring to America” as an phantasm that only a few economists globally share. “There are a few around president Trump perhaps, but I would say 95 % of economists across the world share the view that tariffs are basically not a good thing,” mentioned Malmström.

The European Union has made it clear it’s basically against tariffs, with EU Commission President Ursula von der Leyen saying greater tariffs are disrupting provide chains. “They bring uncertainty for the economy. Jobs are at stake, prices will go up,” she advised reporters in Brussels when asserting the EU response on Thursday.

Trump’s tariff marketing campaign has precipitated widespread concern about dangers to the US economic system. Several Wall Street banks and analyst have downgraded progress forecasts for the world’s largest economic system  amid gloomier knowledge and downbeat sentiment about how tariffs might impression inflation.

‘The most necessary industrial relationship on the earth’

There’s little question quite a bit is at stake.The EU describes the transatlantic commerce relationship as “the most important commercial relationship in the world.”

EU-US commerce in items and companies was €1.6 trillion in 2023, in keeping with knowledge launched by the EU Commission in Brussels. The EU’s exectutive arm describes the connection as “balanced”, saying the distinction between EU exports to the US and US exports to the EU is the “equivalent of just 3% of the total trade” between them.

Trump constantly complains that the EU sells much more to the US than it buys. EU knowledge showsthat the bloc exported €503 billion value of products to the US market in 2023, whereas importing €347 billion. However, the EU acknowledges it has a companies deficit of €109 billion with the US.

When it involves European vulnerabilities, Malmström, now a nonresident senior fellow on the Peterson Institute for International Economics, is especially involved in regards to the automotive trade.

“That is a target for President Trump, not only the German car industry, but the car industry in general. They’re already affected,” she mentioned, pointing to the instance of Swedish automotive big Volvo in her native Gothenburg.

“They’re already affected by steel and aluminum [prices] because they are components in the car industry. And they are afraid that they will get tariffs as well. The car industry in Europe right now is quite vulnerable.”

European automotive producers have repeatedly warned of the hazards of tariffs at a time when the sector is battling competitors from China, the swap to electrical automobiles (EVs) and a pattern in the direction of de-industrialization throughout the continent.

Hildegard Müller, president of the German Association of the Automotive Industry, thinks if Trump have been to extend tariffs on automobiles from the EU, this is able to have a “negative impact” on exports from the EU to the US.

“It would also be more expensive for consumers, all of which would cost growth and prosperity, on both sides of the Atlantic. The tariff level of 25% currently mentioned by President Trump is a provocation,” she advised DW in a press release.

Unpredictability makes negotiations laborious

During her time as EU Trade Commissioner, Malmström negotiated straight with Robert Lighthizer, then the US Trade Representative within the first the Trump administration from 2017 to 2021. Those negotiations paved the best way to a bilateral tariff discount settlement struck in August 2020.

However, Malmström is worried in regards to the propsect of present negotiations because of what she sees because the unpredictability of the Trump method.

“This time it’s much more difficult because you don’t really know what the aim is,” she mentioned. “This is just punishing us for bad tech rules, for unfair behavior, for Greenland, for what have you. How can you negotiate in a climate like that?”

Pointing to Trump’s menace to impose extra focused tariffs in April, she additionally thinks the the scenario has the potential to escalate however insist the EU is not going to achieve this. “The EU will not escalate this. But on the other hand, the tariffs they are imposing on us are illegal. They are against WTO rules. They have no justification. And so you need to strike back.”

Damage on either side

Calling on the EU to be “as prepared as possible” for a protracted and probably damaging dispute, Malmström advocates for using the EU’s Anti-Coercion Instrument (ACI). The software was launched in late 2023 to primarily take care of China after Beijing critically disrupted commerce with EU member Lithuania when Taiwan opened a consultant workplace in Vilnius.

Although the ACI has by no means been used, Malmström thinks it could finally should be utilised for the primary time, if the EU determines that the Trump method quantities to a type of “economic coercion.” Then the EU would have authorized powers to take motion. “It could be tariffs, it could be other kinds of restrictions or export limitations, it could affect investments, it could be public procurement restrictions. It’s a quite big toolbox,” she famous.

For the time being, Malmström hopes that “a deal can still be reached,” even amid the present alternate of levies which is important to “negotiate from equal positions.”

“But of course, nobody wants this to go on for years and years. Our industries are already suffering in Europe, and the damage will be big also in the US,” she mentioned.

Edited by: Uwe Hessler