EU’s trade war nightmare gets real as Trump triumphs

The war-gaming is over. Now a trade war is coming.
Donald Trump’s victory in the U.S. presidential election will force European Union leaders to break the glass on their emergency plan to cope with a comeback by the Republican, whose wins in critical battleground states ended Kamala Harris’ dream of becoming America’s first woman president. 
The real estate mogul vowed on the campaign to bring back jobs to the United States and impose across-the-board tariffs of 10 to 20 percent. He has also threatened to slap a 60 percent levy on all goods coming from arch nemesis China. 
The EU would be ready to strike back fast and hard against any Trump tariffs, senior officials and diplomats say, in a bid to bring him to the negotiating table and hammer out a deal. But with the opening shot in the trade war yet to be fired, the EU’s first response is to appeal for friendship.
“Let us work together on a transatlantic partnership that continues to deliver for our citizens. Millions of jobs and billions in trade and investment on each side of the Atlantic depend on the dynamism and stability of our economic relationship,” European Commission President Ursula von der Leyen said in a message congratulating Trump.
But privately, Trump’s victory is giving EU leaders flashbacks to the 25 percent tariff on steel and 10 percent tariff on aluminum that he imposed in 2018 over national security concerns. 
His second mandate is likely to be worse, analysts and officials fear, with the bloc now more reliant on U.S. liquefied natural gas to meet its energy needs. It’s also worryingly dependent on Washington’s security umbrella as Russia’s war on Ukraine enters a third winter and Russia hawk Joe Biden departs the stage. 
“We should prepare for a much more aggressive tone and possibly attempts of coercive conduct in transatlantic commercial diplomatic relations,” said David Kleimann, a senior trade expert at the ODI think tank.
Those concerns were evident in a statement by French President Emmanuel Macron, who rushed to call his German counterpart Olaf Scholz in a bid by Europe’s two largest economies to display a united front.
“We will work towards a more united, stronger, more sovereign Europe in this new context. By cooperating with the United States of America and defending our interests and our values,” Macron said on X.
Trump has singled out Germany, and its big car exporters, for particular spite in his trade tirades — which were lent fresh fuel by figures published on the eve of the election showing the U.S. trade deficit with the EU on course to hit a record this year.
Germany’s main industry lobby, the Federation of German Industry (BDI), was apparently so stunned by the U.S. election result that it issued a statement incorrectly attributed to “BDI President Donald Trump.”
“Transatlantic relations are facing an epochal change,” the BDI said in an updated statement, citing its head Siegfried Russwurm. Trump’s tariffs “would massively damage not only Germany and the EU, but also the U.S. economy.”
In addition to disrupting global trade — and especially Chinese exports — through his tariffs, Trump’s return could also deal a death blow to the rules-based global trading order and the World Trade Organization, trade economists warn. 
The result would be “profound economic losses,” according to Germany’s Kiel Institute for the World Economy, which forecasts a fall of up to 0.5 percent in EU gross domestic product and a decline in German output of 3.2 percent, with China bearing even greater losses.
An analysis from the German Economic Institute estimates that a new trade war could cost Germany €180 billion over Trump’s four years in office.
Still, the showdown might also offer opportunities to the EU — be it on trade, defense or on its strategy toward China. 
“These election results only reinforce the fact that, as the EU, we need to focus on our own strengths and interests and be clear-eyed about our objectives,” one EU diplomat said on Tuesday morning. 
Both Trump and von der Leyen are China hawks, which might bring them together on how to tackle a glut of cheap Chinese imports.
“The situation these days is much worse,” said Karl Tachelet of lobby group Eurofer, which represents European steelmakers, one sector at the center of the transatlantic rift. “Back then, overcapacity was not so huge yet. Now, it’s growing beyond China.”
Brussels insists it’s much better prepared this time around — now that its top trading partner is set to be led by the unpredictable Trump. 
Coming to terms with the fact that it is now on its own, the bloc insists it is ready to use the trade defense arsenal it has been building up following the earthquake of the first Trump mandate. 
“If the U.S. side imposes unjustified tariffs on EU products, we are prepared for this and will react. If Trump does go ahead with his announced tariff fantasies, then we will bring him back to reality and defend ourselves,” said Bernd Lange, a veteran member of the European Parliament and chair of its international trade committee. 
In the short term, Washington and Brussels will have to solve the Trump-initiated dispute on steel and aluminum, which the two sides have not been able to solve despite the more EU-friendly Biden administration. 
A truce on the EU’s own retaliatory tariffs will lapse in March 2025, a couple of months into the Trump’s tenure. With the clock already ticking, the EU hopes that this will bring him to the negotiating table.
Koen Verhelst contributed reporting.