Editor’s Note: Guy Verhofstadt, a former Belgian Prime Minister, is president of the Alliance of Liberals and Democrats for Europe Group in the European Parliament. The opinions in this article are those of the author.
Since the end of the World War II, Western nations have shared the belief that international trade was a virtue. While progress has too often been lethargic, in the decades since, the United States and European nations have worked together to reduce barriers to trade.
This went hand in hand with a special bond between our two continents – culturally, militarily, as a broad alliance of free nations.
Together, progress has been achieved in the form of the institutions such as the World Trade Organization and the European Community – the forerunner to the European Union.
Trade-based agreements between the EU and the United States multiplied. Progress was made toward a comprehensive US-EU trade deal. Perhaps under a different president, these talks could even have been concluded. By signing trade deals with Japan and Canada, the EU has shown it is capable of cutting global trade deals and furthering rules-based trade.
As US companies have invested in Europe, successful European companies – for example, automakers – invested in the United States.
BMW, a legendary German carmaker, employs thousands of workers at its biggest production plant in South Carolina, which builds nearly half a million vehicles a year. Many of these are exported to Europe and elsewhere.
As with so many policy areas, the election of Donald Trump – an isolationist and protectionist – has upended the status quo. In the capitals of Europe, the trans-Atlantic relationship is turning into a nightmare.
German Chancellor Angela Merkel rightly expressed exasperation at the Trump administration’s suggestion that European cars are a threat to US national security, calling it a “shock.” This was German understatement.
Trump believes the United States “loses” when it runs trade deficits with other countries. Confusingly for many Europeans, traditionally free-trading Republicans appear to go along with Trump’s 16th-century view of international trade.
Following European Commission President Jean-Claude Juncker’s negotiations with Trump in July, the EU made a number of concessions by committing to importing more liquefied natural gas, soybeans and other products from the United States.
The Trump administration told Europeans that it would not impose trade tariffs on the EU or Japan as long as it continues to make progress in trade talks. Now it seems these promises and the progress we have made are about to be torn up.
What has changed? It is unclear. Trump’s personality often requires that someone else must pay the price for the President’s failures. It has been the hallmark of his presidency.
As we have seen with Trump’s government shutdown over his wall, foreigners are easy scapegoats for domestic economic woes, of which the President has a long list. Europe thus risks becoming the next scapegoat for Trump’s failure to do anything to boost the competitiveness or sustainability of US car plants over the long term.
Creating new trade barriers in the globalized world trading system will simply lead to a leakage of jobs by car manufacturers to outside jurisdictions.
The imposition of additional tariffs on the EU would only hurt domestic jobs and investments in the United States. But there would be noneconomic effects of a damaging US-EU trade war, too, which should also be factored in by the Trump administration.
On a human level and in diplomatic circles, even the threat of a trade war against the EU is doing lasting damage to the perceptions of America in European countries, which is deeply regrettable.
Never in my lifetime have US politicians been so tone-deaf to the aspirations and hopes of Europeans. Never have I seen the trans-Atlantic alliance look so fragile. One look at the eye-wateringly awkward responses to Vice President Mike Pence’s recent speeches at the Munich Security Conference and elsewhere reaffirm this.
A trade war against allies still reeling from a global financial crisis triggered by the US subprime crisis more than 10 years ago, just ahead of European parliamentary elections due in May, will not only be economically harmful.
It also would cut deeply into the trans-Atlantic alliance at the worst possible time by giving anti-American, anti-capitalist nationalists and protectionists in Europe a platform to thrive. Anti-American sentiment will grow, and Europe risks a retreat to protectionism. Those of us who make the case for the trans-Atlantic alliance will have a much harder job.