A Stormy Future for the European Union: Bracing for Trade Wars and Internal Strife
By Detlef Fechtner, Brussels
Advances her progression
Former BaFin chief Jochen Sanio's words, "The outgoing year wasn't so bad, at least compared to the next one," ring all too true for EU Commission President Ursula von der Leyen. As we edge closer to 2025, her tenure promises to become increasingly rocky. For starters, the looming confrontations with global partners turning into competitors — even adversaries — will set the stage. Leading this charge is none other than Donald Trump, who's made it clear he's not shy about imposing trade sanctions. If his threats come to fruition, he'll institute import tariffs against Europe and the rest of the world, and especially against China. The EU will then face not only trade-related hurdles but also internal discord as nations within the Union bicker over how best to handle the situation.
Trump's plans could drive Chinese exports to Europe that would otherwise be unsellable in the U.S. due to high tariffs. This flood of cheap goods could potentially ignite a heated debate among Germans and French about the best way to tackle this wave from the People's Republic.
The EU is taking a multipronged approach to navigate these treacherous waters. In response to Trump's proposed tariffs on steel and aluminum, worth 25%, the EU first approved retaliatory measures worth €26 billion. These measures targeted strategic U.S. exports such as motorcycles, bourbon, and agricultural goods. However, the EU later chose to delay implementation, providing more time for negotiations.
Simultaneously, the EU has proposed a "zero-for-zero" tariff deal for industrial goods like cars and machinery, aiming to temper the tension through mutual tariff removal. Additionally, the EU is working on a $56 billion transatlantic trade agreement (targeting July 2025 completion), aiming to fortify energy and tech supply chains, illustrating a dual strategy of pressure and partnership.
The EU has also unveiled a new tool known as the Anti-Coercion Instrument (ACI), which allows it to impose sector-wide sanctions, ranging from financial restrictions to digital trade barriers, against countries that resort to unjust coercive practices. This "big bazooka" could be leveraged against U.S. cloud computing services or financial transactions if negotiations fail.
Strong internal coordination is apparent, as an April 2025 unanimous vote by EU members to approve countermeasures demonstrated. The revised retaliation list, which excluded some goods following the delay, embodied the unity required to weather the storm.
In the face of this potential crisis, President von der Leyen has shown herself to be ready for any eventuality. With her April 2025 warning that "all options remain on the table," she indicates that she's prepared to explore measures like asymmetric digital taxation or climate-linked trade adjustments if negotiations stall.
Ship shape and ready to weather the winds of change, the European Union is bracing for the challenge that lies ahead.
- Ursula von der Leyen, the EU Commission President, faces a tumultuous tenure as an impending trade war with global competitors, including the US and China, looms.
- EU nations are likely to engage in internal debates regarding migration, war-and-conflicts, and general news policies, particularly in response to Donald Trump's threat of imposing trade tariffs.
- The EU has proposed a multipronged approach to handle the impending trade war, including retaliatory measures, a "zero-for-zero" tariff deal, and a $56 billion transatlantic trade agreement.
- The EU has also unveiled the Anti-Coercion Instrument (ACI), a tool to impose sector-wide sanctions against countries using unjust coercive practices.
- In the face of this crisis, President von der Leyen demonstrated strong leadership, hinting at her readiness to explore unconventional measures like asymmetric digital taxation or climate-linked trade adjustments if negotiations fail.
