Europe Plans to Use the U.S. Election to Beat Trump’s Trade War



Richard Bravo & Birgit Jennen | Bloomberg

The European Union is legendary for moving slowly — and that may be just the right pace for confronting President Donald Trump’s trade wars.

While the daunting threat of U.S. tariffs on Europe’s auto industry and other measures is very much alive, one line of thinking in the EU is that Trump will be less trigger-happy the closer he gets to the 2020 election. The logic is that he’d risk a voter backlash if the EU retaliated by targeting U.S. exports, notably farm products.

Right now, the awkward EU-U.S. truce is held together by the prospect of a big trade accord. To preserve the status quo, the proposal would slow-walk the negotiations, pushing them deeper into the campaign on the expectation that the Trump administration will be too focused on his re-election to escalate tensions with Europe, two European government officials said.

To convey the impression that talks are moving forward, the EU would make limited concessions on peripheral issues such as aligning regulatory standards, according to the officials, who asked not to be identified because the discussions aren’t public. The bigger goal is a reset of trans-Atlantic relations after the election — effectively a high-stakes diplomatic bet that Trump loses.

Major Challenge

If U.S. car tariffs are introduced, 8.6% of euro-area transport industry output is at stake.

To be sure, the strategy carries an element of risk as Trump could always defy expectations and turn up the heat on the EU just as the election nears, unleashing more protectionist measures in a bid to play to his core voters.

The proposal, which is among a range of options floating around Europe and isn’t official EU policy, coincides with a delicate transition at the EU’s power center.

Incoming European Commission President Ursula von der Leyen, an ally of German Chancellor Angela Merkel, is signaling she won’t back off the EU’s forceful strategy of defending its commercial interests and upholding the global trading order.

Von der Leyen’s plan is “to convince our friends from the U.S. that it’s better to find a good compromise and work together,” she said in an interview on July 16.

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