Donald Trump’s return to the White House presents Europe with a pivotal challenge: navigating economic pressures and geopolitical shifts while striving for greater autonomy and a multipolar global order.
Trump’s Onslaught on Europe
With Trump threatening tariffs on Europe, the transatlantic region may end up facing a ‘trade war’ that no NATO can fight. This is happening at a time when key European states, such as France and Germany, are also facing domestic political crisis. The impact of this ‘transatlantic trade war’ will be huge. In 2023, US-Europe bilateral trade in goods and services stood at 1.54 trillion US dollars. Trump’s tariffs and the EU’s retaliation will mean massive jolts, shaking up most things as they currently stand. In 2023, the trade deficit was in favour of Europe. To cover this up, Trump has already warned Europe to buy more gas from the US or face tariffs. “I told the European Union that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!,” he said in a post on his social media site Truth Social. This demand is regardless of the fact that Europe is already one of the biggest buyers of US liquified natural gas.
There is little denying that Europe needs gas. With Trump bullying the continent into buying more from the US, it means that Trump is looking to completely deny the continent even the semblance of what it means to be a strategic ally. This is in addition to the already existing proposals for making NATO completely dormant, i.e., withdrawing US troops from the continent, and letting Europeans manage their own security.
Still, even if Europe somehow submits to Trump’s will and buys more gas from the US, there is no guarantee that Trump will not impose tariffs and/or that his policies will not hurt European interests. For instance, Trump has already announced to withdraw from the Paris climate accord. If he does, it would immediately translate into a competitive advantage for the US companies, currently burdened by carbon taxes, over their competitors worldwide, including in Europe.
Coupled with general tariffs of 10 to 20 per cent that Trump has promised to impose on all countries regardless, means that Donald Trump ultimately wants countries that send their exports to the US to move their manufacturing to the US (to make things cheaper and create more employment). If European companies do not move and tariffs are imposed on them, it will erode Europe’s GDP by up to 1.5% or about €260 billion. If trade falls, it will weaken the Euro as well, adding to the continent’s overall economic woes.
How Europe is Responding
The past few months have seen some significant developments taking place in the continent. There are talks of a European system of security. A report in the European Council on Foreign Relations said that Europe should explore increasing their nuclear capacity to ensure deterrence. This push specifically includes the UK, which is no longer part of the EU but is still a NATO member. The report further notes that the “UK can help extend European power and security through cooperation on sanctions, technology controls, supply chains, critical raw materials, energy security, migration, and joint action against gangs and human traffickers, among other issues. To make that happen, the biggest EU member states – France, Germany, Italy, Poland, and Spain – will need to transcend their respective domestic politics to establish a pan-European consensus”.
While there is an increasing realization that Europe needs internal unity more than ever, there is also a growing sense that Trump’s return might be the shock Europe somehow needed to come to its own. A report in September by Mario Draghi, Italy’s former prime minister, said that Europe needs to mobilize €800 billion annually to avert its inevitable decline. Where this money will eventually come from is not clear, but what it needs is a consensus within Europe to revitalize itself.
Mario’s report specifically said that Europe needs this money – preferably from within Europe – to close the widening gap between Europe and the US on the one hand and Europe and China on the other hand. In other words, this report places Europe as an actor not necessarily tied to the US. It sees the US as a competitor, and Donald Trump’s return to the White House is only going to reinforce the sense of competition.
Former European Commission President José Manuel Barroso thinks that “The EU has a chance to cease being a geopolitical teenager and progressively assert itself on the world stage alongside America and China”.
Counter-tariffs
But boosting its capacity is not the only response the EU has up its sleeve. Counter-tariffs on US exports to Europe might be well on their way, too. A report in the New York Times said that “The early effort within the European Commission, the administrative arm of the European Union, includes analyses of what impact certain tariffs would have on different European countries and sectors, according to a senior European diplomat, who spoke on condition of anonymity given the political sensitivity of the conversation. The group is discussing what American products to potentially target for tariffs in retaliation”.
If that happens, Europe will be in a potentially full-fledged trade war against the US. Coupled with its quest to invest in and boost its capacity, this ‘trade war’ might allow Europe to become a lot more autonomous than it currently is or has been since the end of the Second World War. A more autonomous Europe means a more multipolar – and balanced – world than the one we have had under Washington’s unilateralism since the 1990s.
Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs.