Divide and conquer with threats of tariffs: Trump presses the weak points in Europe

Even before he entered the White House, last weekend Donald Trump proved his ability to influence the markets in Europe with just a few words. A short post he posted on the social network he owns (Truth) on Friday, in which he threatened the European UnionThe threat of high protective tariffs if Brussels does not increase its energy purchases from the US led to the fall of the euro to a two-year low against the dollar and declines of up to 2% in the leading stock indices on the continent. Since then the indices have recovered, but the signal from Washington remains clear: Trump is not ignoring his promises to threaten Europe to achieve economic and political goals.

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Trump has already opened several fronts with the European Union. Precisely the first is the one in which Brussels is willing to go towards the US significantly. If in Trump’s first term Europe was still dependent on Russian gas (“completely captives of Russia”, Trump defined Germany at the time), then the picture has changed for the impending second term.

The cheap Russian gas that flowed in Nord Stream has been replaced in the last two years by expensive liquefied natural gas (LNG) that comes mainly from Qatar, Algeria and the USA. In fact, the USA has become the largest supplier of liquefied natural gas to the European Union, with about 48% of imports in 2023, with an estimated value of about 20 billion dollars. It is also responsible for about 20% of the oil imports of the EU countries.

And yet, Trump’s threat made waves. “I told the EU that they must cut their huge trade deficit with the US by buying our oil and gas on a large scale. Otherwise, there will be tariffs all the way,” was the swallow that heralds a new round in Trump’s trade and tariff wars with Europe. This deficit, according to American calculations, stands at about 200 billion dollars a year. If Trump wants it to decrease significantly, more will be needed than procurement Energy from Europe.

Escalation of demands from the US

The European reaction to Trump’s opening move on this front was moderate and considered, according to which the European Union is considering increasing its energy purchases from the US anyway. “It is strange to threaten us with something we declared that we intend to do,” a senior official in the Union told the European media. Officially, the Commission said that ” The Union is ready to discuss with President Trump how to strengthen the already strong alliance between us, by discussing our common interests in the field of energy.” At this point Europe, It seems, ready to go far on this front, perhaps to achieve achievements on other fronts.

And these are not lacking. Only a day after Trump’s threat, the “Financial Times” revealed that Trump is expected to demand that European countries spend no less than 5% of their GDP on security, even more than the US (4%). The report is based on talks that Trump’s representatives have already held in Brussels and other European capitals, and is a significant escalation in American demands. In the fine print it is written that Trump will “make do” with spending 3.5% on security, but even so it is tens of billions of euros cumulatively every year for European countries, most of which are in a fragile economic situation.

Germany, for example, had to make financial maneuvers, including extra-budgetary funds that bypass its “zero deficit” principle, just to reach an expenditure of 2.1% in the past year. Meeting Trump’s goal means spending an additional 30 billion euros a year, a huge amount considering its dire situation. Trump also did not hide his threats to remove American defense, including denying the collective defense clause of NATO members, from countries that would not contribute sufficiently, according to his decision.

In addition, over the continent hovers Trump’s threat during the election campaign, to impose protective tariffs of 20% “on all goods coming from the European Union”, and the more concrete threat to Canada and China in recent weeks to impose tariffs if they do not fight immigration to the US and drug smuggling. In Brussels, they are breaking the The head is trying to decide whether to respond in such a case by mutual tariffs, which may further deteriorate the economy on the continent and contribute to the inflation that has just gone down, or to start some kind of dialogue with the Americans.

In Germany in particular they fear a tariff war against them, in the form of Mag tariffsare particularly high on European vehicles imported to the USA. Trump did not hide in the past his vision “not to see a single Mercedes on Fifth Avenue”, and to divert consumption towards American luxury vehicles. For the German automobile industry, which is already facing a drastic drop in demand from China and Asia as a whole , this could be a death blow. And there is also the implied threat sent by Trump over the weekend against Denmark, one of the most significant allies of the US. In NATO, according to which Greenland “should be in American hands”.

will divide the union?

In fact, the very mixing that Trump creates between economic and political issues, the threat of using tariffs to achieve goals such as defense spending, the fight against immigration or the war on drugs, is an injury to the soft underbelly of the European Union. This is because the two areas are split in the European Union: Brussels is exclusively responsible for the trade area of ​​the 27 member states of the Union, while the governments are responsible for security policy and diplomacy.

The Union has an inferior starting point in this type of confrontation. Therefore, the different fronts opened by Trump are expected to divide the European Union within itself. Eastern European and Baltic countries that want 5% defense spending against Germany and the Netherlands that want less. France and Italy who want a European arms industry compared to those who want to purchase from the Americans. Countries with an interest in selling vehicles in the US compared to those for which the field is less relevant. The mixing of the economic and the political plays exactly on the weak point of the European Union today, and this may be another goal of the American president. After all, he previously defined it as the greatest threat to U.S.