Uncertain transatlantic trade future
The US is one of the EU's key trading partners. Consequently, the outcome of the American presidential election will significantly affect the transatlantic trade relationship. Here, we wish to highlight what the presidential candidates' approaches may mean for the future of this important trade relationship.
Felinda Wennerberg, Senior Policy Adviser
If Donald Trump is elected, the world of trade policy faces a time of turmoil. During his last presidency, Trump stated, that “trade wars are good, and easy to win”. Crucial to Trump’s approach to trade policy is his obsession of trade balance and the American trade deficit. His campaign is focused on “America first” to promote a “rebirth” of American industry and to create strategic autonomy for the US. Trump’s trade policy tool of choice is the use of tariffs, and he has described tariffs as” a tax on a foreign country”. His aims to introduce at least 60 percent tariffs on goods from China and 10-20 per cent tariffs on imports from other countries clearly illustrates his approach to trade policy. Consequently, if elected, Trump will likely pursue a protectionist trade agenda.
Kamala Harris’ position on trade policy is relatively unknown.
Kamala Harris’ position on trade policy is relatively unknown. However, as a senator, Harris was one of ten members of the senate to vote against the United States-Mexico-Canada Agreement, as well as being opponent to the Trans-Pacific Partnership. In ways similar to Trump, her campaign has focused on American industry and workers’ rights. It is therefore likely that Harris will continue the worker-centric trade policy established by the Biden administration. Given these aspects one should not expect pronounced, progress for the transatlantic trade relationship even in the event of a Harris-administration, although such an administration likely would be more predictable on trade issues.
Harris has criticized Trump’s approach to the use of tariffs and the cost this could mean for the average American citizen. Harris will therefore probably avoid the broad approach to tariffs as proposed by Trump. However, it is reasonable to assume that she will make use of strategic tariffs to address China and limit, what is perceived as, unjust competition from that rising power.
Regardless of who finally takes home the title as the 47th president of the United States, the EU cannot expect great progress for transatlantic trade.
Regardless of who finally takes home the title as the 47th president of the United States the EU cannot expect great progress for transatlantic trade. There are however a couple actions that the EU could take to promote the trade relations.
Evidence-based cooperation
Both presidential candidates are focused on domestic policy and strengthening the American economy. Therefore, for the EU to succeed in their dialogue with the US it requires that the EU use evidence to demonstrate the American added value of a trade cooperation with the EU.
A proactive approach
Regardless of the outcome of the election, the EU cannot expect an American trade policy based on trade liberalization. It is therefore important that the EU independently pursues a proactive trade policy that is not overly dependent on the positions of the United States. At the same time, the United States is an important trading partner. Therefore, the EU should continue to try to cooperate with the US where possible and possibly in new and innovative forms.
Explore possibilities for a digital trade agreement
The TTIP negotiations illustrated the challenges in reaching a broad agreement between the EU and the US. However, a digital trade agreement would differ from previous attempts and could be something that the EU should explore.
It is important that the EU has a clear trade policy strategy of its own.
Maintain a rule-based trade policy and cooperate with others
Geopolitical and security policy challenges put pressure on how the EU should act in the future. Here, it is important that the EU has a clear trade policy strategy of its own. In issues where it is possible to cooperate with the US or others, the EU should strive to do so. Even small steps forward can help mitigate the damage of a protectionist trade policy.
Companies in the EU must prepare
The result of the US presidential election may have major effects on the world economy and on inflation. Companies within the EU therefore must prepare for increased costs following the different actions the president may take.
In conclusion, we have an uncertain time for trade policy ahead of us. Regardless of who wins the election, the EU needs to continue to promote the transatlantic cooperation with the US. At the same time, it is important that the EU takes its own positions and seeks deepened trade cooperation with others.
A missing link in the transatlantic cooperation is the lack of a free trade agreement between the EU and the US. Although it is probably not possible to initiate negotiations on a free trade agreement with the next incoming administration, the EU should continue to work to be able to conclude an FTA with the US in the future and thereby form one of the largest free trade zones in the world.
Felinda Wennerberg
Senior Adviser, National Board of Trade Sweden
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