It turns out Donald Trump might be the best thing that’s happened to free trade—at least for Europe.
By building a tariff wall around the United States in line with his “America First” policy, the American president is unintentionally encouraging other countries to band together in an effort to cushion the blow that policy is dealing to their exports, reports N1.
Under pressure from protectionist-leaning France and international climate protests, the European Union has spent the last five years using trade policy to promote the bloc’s values—such as human rights and sustainability—which has frustrated partners like India, Indonesia, and the South American bloc Mercosur. But now, with the U.S.—its historic ally—opting to go it alone and shaking global markets and trade networks with a barrage of tariffs, the EU is quickly positioning itself as a strong liberal trade bloc open for business, reports Politico.
This shift is welcomed by the EU’s more economically liberal member states, which have often opposed French protectionism. The World Trade Organization predicts a 0.2% decline in global trade this year, a figure that could climb to 1.5% if Trump reintroduces higher tariffs—such as the 20% tariff on the EU—that he has currently suspended for 90 days to allow for negotiations.
Since securing her second term in December, European Commission President Ursula von der Leyen—who oversees trade policy for the 27 member states—has marked a series of trade wins. Brussels has finalized long-standing negotiations with Mercosur, as well as with Mexico and Switzerland. Talks with Malaysia have been restarted, and negotiations with the United Arab Emirates are underway.
EU Strengthens Its Own Standards
EU nations like France, Belgium, and Austria—previously reluctant to open their sensitive markets—are now viewing trade agreements as a geopolitical necessity, not just an economic bonus. France, for example, whose political elite had rejected the EU–Mercosur trade deal as politically and economically toxic, is now quietly softening its position in light of Trump’s trade offensive.
The transatlantic trade relationship is Europe’s largest, with total goods exchange worth €1.6 trillion. It is followed by the United Kingdom, China, and Switzerland. Although the EU and China have floated the idea of resetting relations in response to Trump’s tariffs, a trade agreement is not currently on the table—pushing the EU to broaden its list of partners.
Still, despite the short-term relief for free trade advocates within the EU, that doesn’t mean new deals will come easily—at least not yet. There are growing fears that Trump’s tariffs could redirect Chinese exports from the U.S. to Europe, prompting calls for increased protection of the EU’s single market.
And while Trump has sparked renewed hope for a potential positive outcome in the transatlantic trade dispute during Italian Prime Minister Giorgia Meloni’s recent visit to the White House, a comprehensive deal seems unlikely.
That’s the goal of Germany’s future chancellor Friedrich Merz, who insists the best outcome for Europe in dealing with the U.S. would be a mutual agreement to eliminate all tariffs.
Since the collapse of the Transatlantic Trade and Investment Partnership (TTIP) talks in 2016, the European Union has bolstered its standards for environmental protection and human rights. But even if it were to relax or delay key parts of its green agenda, it likely wouldn’t be enough for a Washington administration focused primarily on business interests.
