If US president Donald Trump goes ahead with his threat to impose tariffs on eight European countries, then the EU has no choice but to respond. And to do so strongly. There are discussions and some differences of view on how quickly the EU should now move, particularly given Trump’s failure to follow through on some previous tariff threats. But the US president must be left in no doubt that the EU will fight back against his latest attempt at bullying.
Trying to humour Trump is not a successful strategy. The EU and the US agreed the outline details of a trade agreement last July, but if Trump now proceeds to impose the threatened additional 10 per cent tariffs on six EU countries he will be effectively tearing this up. And doing so in pursuit of seeking ownership of the sovereign territory of an EU country.
If any more evidence was needed of the unreliable nature of the US as a political and economic partner, this has now provided it. The chaotic nature of the US president’s policy statements mean it is possible that he will draw back from the tariff threat on some pretence. A pending US supreme court decision on the legal basis on which many existing tariffs have been applied by the administration may also have an impact.
However, the EU – along with the two non-EU countries threatened, Norway and the UK– should plan on the basis that the additional tariffs will be imposed from the start of next month. And decide what they will do in response.
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Both sides lose in a trade war, but this is what is now in prospect. While only six member states have been threatened with new tariffs, the EU must respond as a bloc. This inevitably draws in countries like Ireland, who were not on Trump’s initial list. But as Taoiseach Micheál Martin said yesterday, unity is vital. And it may be hard won, given the diversity of views and political motivations around the EU table.
Martin urged some caution and leaving space for dialogue. And it may be wise to see how events play out in the next few days. But, as the Taoiseach said, if the tariffs are put in place, then the EU has to respond. Tariffs on US goods entering the EU are likely to be the first move from Brussels. But there are already calls from some capitals to go further, including through the use of an anti-coercion instrument which would allow the EU to target big companies, including the digital technology giants, with punitive measures.
As the EU economy most reliant on US investment and trade, Ireland is seriously exposed if this row develops. The State has weathered the initial imposition of tariffs on some exports well. But the row over Greenland could bring economic and political tensions to a new level, unless Trump can be persuaded to draw back. Given the binary nature of the central issue – ownership of Greenland – there seems no clear way to achieve this.
