EU Likely to ‘Balance Out’ Any New Trade Actions Issued by Trump, Panelist Says

The EU could soon see a sharp uptick in its use of defensive trade policy tools, especially if Donald Trump is elected the next U.S. president and follows through with his promise of a new global tariff (see 2409110015), at least one panelist said during a roundtable discussion on EU competitiveness.

If Trump “does as he said he will do, he'll unleash a trade and investment war,” said Georg Riekeles, head of Europe’s Political Economy program at the European Policy Centre. Riekeles, speaking during an event this week hosted by the Atlantic Council, said the EU likely will examine what types of trade measures it should impose in response to “balance out that relationship” with the U.S.

“I think, very quickly, we can be facing a situation as Europeans where it's actually all the defensive or anti-coercion mechanisms, the reactive tools, that we'll be using,” Riekeles said.

Riekeles and other panelists during the event were discussing a European Commission report published earlier this month with recommendations to shape the future of European competitiveness (see 2409090048). Riekeles said the report stressed that this is “no longer the world of yesterday, where the EU can look at open markets and sort of hope for the best.”

He also touched on China, saying current EU sanctions against Beijing, as well as its plans to impose countervailing duties on Chinese electric vehicles (see 2408200020), “is just the beginning of a story unfolding.” The EU is increasingly departing “from this logic of China being a partner,” he said, calling the country a threat to European security. He noted that China participated in military training operations near the Polish border in Belarus this summer.

“We have retooled, and it's really a matter of now, in terms of economic security, to make sure that we use those tools when we need to,” Riekeles said.

Penny Naas, a nonresident senior fellow with the Atlantic Council’s Europe Center and former executive with UPS and Citigroup, said she believes policymakers in Europe still aren’t aligned on the best way to address China. She pointed to the fact that China appears to be successfully lobbying some EU member states to block the EU’s new EV tariffs.

Beijing is working with German officials to gather other EU states to oppose the tariffs during an EU vote planned for Sept. 25, the South China Morning Post reported Sept. 17.

“China seems to be kind of successfully going around Europe and picking off member states with regard to potentially trying to see if they can get the tariffs on electric vehicles either lowered or to be not imposed at all,” Naas said. “I still think that there is not 100% agreement with whether China is a partner or a problem.”