Trade tensions drive strategic shift of EU

The United States and the European Union are racing to finalize a trade deal ahead of a July 9 deadline, but analysts warn that deep divisions over tariffs, regulations and geopolitical priorities leave little hope for a timely agreement.

The trade dispute shows a widening rift between the two sides, experts said. The aggressive trade policies and harsh words of US President Donald Trump's administration toward Europe have eroded trust and accelerated Europe's push for strategic autonomy, they added.

Tensions have simmered for months. In April, the US imposed a 20 percent "reciprocal tariff" on most EU imports, later reducing it to 10 percent to allow room for negotiations. Frustrated by the slow progress, Trump warned on May 23 that tariffs could jump to 50 percent by June 1 if no deal was reached.

However, after a "very nice" phone call with European Commission President Ursula von der Leyen on May 25, Trump extended the deadline to July 9, offering a glimmer of hope for a breakthrough.

Still, analysts remain pessimistic about the prospects for a swift and successful resolution, citing complex sticking points, power imbalance and US arbitrariness in the negotiations.

"The US government has initiated the tariff war without a clear objective or strategy, resulting in a high degree of arbitrariness," said Tian Dewen, a researcher on European issues at the Chinese Academy of Social Sciences. "The series of chaotic and contradictory signals from the US has left the current US-EU negotiations without a clear direction, let alone discussions on details."

Jasna Plevnik, president of the Geoeconomic Forum Croatia, said the EU has shown a willingness to appease Trump and finalize a deal by buying more US liquefied natural gas and defense equipment, and increasing investments in the US.

However, Washington is demanding more — including exemptions for US products from EU food safety regulations and value-added tax, Plevnik said.

"These have been sticking points …but the EU does not seem willing to concede in those fields and sacrifice its core standards," she said, while acknowledging that the bloc has no "strong card" to count on given its substantial geopolitical vulnerability.

Dan Steinbock, founder of the global consultancy Difference Group, reinforced this point, saying the US is likely to leverage geopolitical pressure to achieve its economic goals.

"As the EU's latest zero-for-zero tariff has stalled amid US pushback, the outcome of US-EU talks can only be suboptimal."

Michele Geraci, former undersecretary of state at Italy's Ministry of Economic Development, said a timely agreement is "almost impossible" for both technical and political reasons, because neither side wants to be perceived by its own people as conceding.

The negotiations are further complicated by the "unequal" US-EU relationship, Geraci said, describing it as "one between a stronger hegemonic economic power and a weaker player".

This perceived power imbalance is hardly new. In the 1980s, the US forced Japan into signing the US-Japan Semiconductor Agreement and slapped sanctions on Japanese semiconductors and computers. In 2018, it hiked tariffs on EU steel and aluminum, citing national security concerns.

Steinbock said the patterns of US economic pressure are recurring. "The US pressure on Japan in semiconductors in the 1980s has parallels with the weaponization of the tech sector by the Trump-Biden-Trump administrations," he said.

Sun Chenghao, head of the US-EU program at Tsinghua University's Center for International Security and Strategy, said the US' current tariff war can be seen as another instance of economic coercion against its allies.

"The underlying motive … is simple: to preserve industrial dominance and technological hegemony while containing potential rivals," Sun said. "By weakening their economic foundations, the US ensures greater dependence, thereby reinforcing its own hegemony."

Economic supremacy

Geraci echoed the view, saying Washington is very smart to adopt such a foreign policy — to pursue economic supremacy by forging allies.

"It seems to be a contradiction, but it's the best way to do it. You pretend you're a friend, and then you don't behave like a friend," he said. "I don't criticize them, but I criticize the people who believe in this."

However, the EU seems to have hit an epiphany about its view of the US after Washington disregarded European concerns on Ukraine, pressured NATO allies to boost defense spending, criticized EU values and imposed tariffs.

Tian said these policy shifts have continuously widened the trans-Atlantic rift. "As a result, many European political figures have largely abandoned the illusion of the US as a leader of the world order and a reliable ally."

Last month, speaking at the award ceremony for the International Charlemagne Prize in Aachen, Germany, von der Leyen called for building an independent Europe.

She cautioned against the belief that "things will go back to how they were before, if only the war would end, or a tariff deal be struck, or the next elections have a different outcome", suggesting a more permanent shift in the trans-Atlantic relationship.

Plevnik emphasized the role of eroded trust in this shift.

"The trans-Atlantic partnership, as it was before Trump, has gone for now. The economic coercion of the US and President Trump's vague strategic policy (toward) Europe do not look trustworthy," she said.

Sun sees von der Leyen's remarks as indicative of a broader trend, signaling that US-Europe relations are undergoing a profound adjustment.

"In the future, Europe will accelerate its de-risking from the US and push for strategic autonomy. Faced with the unpredictability of US policies, European countries have become aware of their vulnerability due to dependence on US military protection and energy supplies."

However, Europe's path to strategic autonomy is fraught with risks, Sun added. "To completely break free from US dependence, Europe must overcome numerous challenges, including internal coordination, economic burdens and military capability development."

Geraci echoed this caution. "It's easy for the EU to declare that the US is no longer a friend," he said. "However, they will soon recognize that they lack the necessary tools and resources and will need to purchase them from America. This realization will quickly set in, tempering this epiphany moment."

Despite short-term constraints, Geraci said a weakening trans-Atlantic relationship will be a lasting trend, because it aligns with "the decay of the US hegemony and the growth of the multipolar world". "So it's a change that is there to happen anyway," he said.

Tian said the EU is fast-tracking a diversified economic cooperation network, including advancing trade negotiations with India, Australia and Southeast Asian countries, while adopting a more pragmatic stance toward China. Sun added: "Going forward, US-Europe cooperation and competition will coexist, but competition will intensify."

Contact the writers at yangran1@chinadaily.com.cn.