On Sunday, US President Donald Trump described the US’s economic relationship with the European Union as “an atrocity.”
“They don’t take our cars; they don’t take our farm products,” Trump said, describing the trade deficit between the US and EU. “Essentially, they don’t take almost anything.”
Trump claimed that the trade deficit was about $350 billion (€337 billion), which independent media have since refuted. According to EU data, the overall trade balance comes to about $53 billion in favor of the European Union when considering the US import surplus in services.
On Tuesday, the European commissioner for trade and economic security, Maros Sefcovic, clarified that this balance amounted to about 3% of the €1.5 trillion annual trade volume between the EU and US.
Trump: ‘Definitely’ tariffs
On Sunday, Trump repeated his threat that he would “definitely” impose tariffs on goods from the European Union. But, so far, EU heads of state and government have shown a unified self-assured response.
Trump had previously slapped steep tariffs on goods from China, Canada and Mexico, but has since suspended the measures against Mexico and Canada for a month.
Ahead of an informal meeting of EU heads of government in Brussels on Monday, German Chancellor Olaf Scholz said a change in customs policy that made the exchange of goods and services difficult “would be bad for the US and bad for Europe.”
Scholz said the European Union could respond with steeper tariffs of its own.
Luxembourg Prime Minister Luc Frieden offered a similar take. “If someone wants a trade war,” Frieden said, “they can have it.” He and Scholz did say, however, that they highly value trans-Atlantic relations and cooperation.
Cooperation or competition?
Whether as an ally in providing support to Ukraine or as a market for its sales, the EU needs the US, Arthur Leichthammer, a policy fellow for geoeconomics at the Berlin-based think tank the Jacques Delors Centre, told DW.
Leichthammer said the protective shield provided by US nuclear capabilities, the collective defense guarantees within the NATO alliance and overall military cooperation with the United States were crucial elements of the EU’s defense strategy. These dependencies could make it hard for the bloc to stand up to the US, Leichthammer said.
Nevertheless, Leichthammer said, the European Union must pursue a credible and unified policy of deterrence in response to Trump’s tariff threats. Leichthammer said he believed that EU heads of state and government had sent important political signals along this line on Monday.
Lithuanian President Gitanas Nauseda also highlighted the European Union’s dilemma on Monday, when he pointed out that the US and EU are cooperating within NATO, but competing economically.
EU asserts independence
In terms of NATO cooperation, Trump has already set the tone for the coming years: Moving forward, he expects alliance members to allocate 5% of their national gross domestic product (GDP) to defense spending. This is up from the current nonbinding 2% recommendation, which not all members have met.
Seven EU member states, among them Italy, Belgium and Spain, spend below 2%. In 2024, Germany hit the target for the first time since the 1990s.
The EU and its member states are currently looking for ways to make their defense strategy less dependent, more resilient and more efficient. Strengthening the defense industry and jointly purchasing weapons systems could play a key role in this.
Most EU officials agree that more needs to be invested in defense. The European Commission has estimated that, in the coming 10 years, €500 billion worth of defense spending will be required.
The European Commission aims to present a strategy by March for EU leaders to discuss in June. But it still must be determined how these funds are procured.
Though Poland and Baltic member states have suggested shared loans for defense investments, Germany and other countries have been decidedly against such a proposal.
Other considerations include expanding the role of the European Investment Bank, which in 2024 greenlit investment plans for so-called dual-use goods that could serve civilian and military purposes.
Appeasing Donald Trump
Leichthammer said the EU would still have to be mindful of its dependence upon the US, and should approach Washington to allow Trump to make one of his prized “deals.”
He said this could happen by purchasing liquefied natural gas (LNG) from the United States, deepening trans-Atlantic cooperation in relation to China or buying US weapons systems.
The European Union has already begun discussions on whether one of these measures might help avert US tariffs on EU products. On Monday, Nauseda urged the bloc to propose “something interesting and attractive” for the US.
But, Leichthammer said, ambitions for increased defense spending in favor of the United States might still fail in the face of France’s opposition to such measures. Leichthammer said officials in Paris were questioning whether EU defense money could be spent on providers outside of the bloc.
The European Commission would be responsible for future trade negotiations. And, in terms of LNG imports, European Commission President Ursula von der Leyen has signaled her willingness to negotiate.
On Tuesday, von der Leyen said the European Union was “ready for tough negotiations where needed” and willing to find “solutions where possible.”
Von der Leyen said the bloc would be “open and pragmatic” about working out a “stronger partnership” with the US while protecting EU interests.
This article was originally written in German.
