Speaking at a previously unannounced joint news conference in the White House Rose Garden on July 25, EC President Jean-Claude Juncker and US President Donald Trump stated that they will work together to resolve their recent trade tensions before the situation escalates any further. “We agreed today to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods“, Trump said. That means eliminating both the steel and aluminum tariffs that Trump’s administration imposed earlier this year and the EU’s retaliatory tariffs that followed.
Essentially, this announcement means the two have reached a deal to make a deal with more permanent arrangements to follow. After the announcement, the US President tweeted a photo of the two embracing with the following caption: “Obviously the European Union, as represented by @JunckerEU and the United States, as represented by yours truly, love each other!” Juncker followed with his own tweet: “I came for a deal, we made a deal. The EU continues to stand up for free and fair trade.” Imminent sanctions are off and the relationship between two of the world’s largest economic powers is already on the mend.
Specifically, Juncker and Trump have agreed that the EU will import billions of dollars more in US soybeans and liquefied natural gas. This will stimulate the American economy, while minimising the EU’s reliance on Russian energy. The two have also agreed that Trump will not impose further tariffs, such as the 25 percent tariff on European cars coming into the US that he previously threatened. The sides will continue to work towards the elimination of all economic barriers on non-auto industrial goods. These efforts will open markets for producers, increase investment, and support greater prosperity in both the United States and the European Union.
The Trump administration has faced harsh criticism since his initial tariffs have proved harmful to American farmers. Lawmakers have since threatened to counter the president’s initiatives if he follows through on imposing tariffs on European auto imports. His administration is now working towards lowering trade barriers in an effort to reduce the $152 billion US deficit in American-European merchandise trade. European leaders also hope for an end to new tariffs and other measures that could restrict access to US goods. The Union has already struck deals with nations like Japan to diversify its trading partners and protect the EU economy no matter what comes next.
Contingent on Good Faith
Some members of the EU, like France, say that Juncker wasn’t hard enough on the US after the country accused the EU of unfair trade practices. Finance Minister Bruno Le Maire told the press that the EU refuses to negotiate “with a gun to the head” and that the US should be the first to de-escalate tensions. German Economy Minister Peter Almaier, on the other hand, tweeted that the talks were a breakthrough that can “avoid trade war and save millions of jobs”. President Juncker emphasised that these conversations forge a plan for the future, ensuring that the EU “will not go against the spirit of this agreement unless either part terminates the negotiation”. EU Trade Commissioner Cecilia Malmström reportedly accompanied Juncker to meet with US lawmakers and gauge the chances that actual legislation would follow.
Experts predict that further negotiations are unlikely to be carried out until Trump removes the steel and aluminium tariffs currently in place. The European Commission faces a challenge in reaching consensus among the 28 Member States with divergent trade priorities. However, Juncker and Trump have agreed to work in tandem with the World Trade Organisation to negotiate trade standards and costs in an effort to protect American and European companies from unfair global trade practices including intellectual property theft, industrial subsidies, and overcapacity. Involving an international organisation increases the possibility of reaching truly fair ground.
Future of Free and Fair Trade
Rebuilding the EU-US relationship bodes well for the future as well. Trade relations where both the EU and US succeed could improve cooperation about global security, energy, and other mutual goals. Stable trade grounds also unite these powers on concerns over China’s trade behaviour and their influence on the global economy. In a joint statement following the news conference, the US and EU pointed out that they account for more than 50 percent of global GDP. “If we team up, we can make our planet a better, more secure, and more prosperous place”, it read.
The EU has long engaged with the US without confrontation and if this style of dialogue continues, it could be a win-win for both nations and their people. An agreement, after all, would cost much less than the price of retaliation.