EU will face growing US protectionism under either Trump or Harris, analysts say

EU leaders will have to contend with the economic fallout of growing US protectionism regardless of who wins next week’s presidential elections (5  November), analysts say.

Former President Donald Trump’s unabashed support for steep tariffs on all US imports has alarmed EU policymakers and business groups in recent months, with the latter warning that such measures would severely harm European exporters and lead to billions of dollars worth of Chinese goods being re-directed from the US and ‘dumped’ on Europe.

However, experts also warn that the election of current Vice-President and Democratic nominee Kamala Harris is unlikely to halt Washington’s shift toward heightened protectionism, which started to take shape during Trump’s first term and – many point out – has continued under current President Joe Biden, with measures such as the Inflation Reduction Act (IRA).

“I think the best case scenario [for Europe] is the Harris administration continuing protectionist policies as Biden did – with a friendly face,” Niclas Poitiers, a research fellow at EU policy think-tank Bruegel, told Euractiv.

Poitiers noted that Biden has merely frozen – but not definitively resolved – key points of transatlantic friction, including Washington’s imposition of duties on EU steel and aluminium exports in 2018 and a decades-long anti-subsidy dispute between US aircraft manufacturer Boeing and EU rival Airbus.

Although Biden’s late withdrawal from the race has afforded Harris little time to clarify her views on global trade and economics, her policies are unlikely to differ significantly from those of the current administration, Poitiers added.

“There was a much better relationship between the EU and the US [under Biden],” he said. However, he added, “Biden was not someone that is in any meaningful way a free trader, in the same way that Trump was not."

Thursday 31

Volkswagen’s historic decision to shut factories in Germany is a symptom of a broader crisis confronting the European economy – one that could be compounded by the US re-election of Trump or retaliatory tariffs by Beijing against EU duties on Chinese EVs, analysts said. The Wolfsburg-based carmaker’s announcement on Monday (28 October) to close factories on home turf for the first time since it was founded in 1937 comes as high energy prices, weak demand, and fierce Chinese competition combined to make Germany the world’s worst-performing advanced economy last year. Read more.

Wednesday 30

Europe should increase its defence funding "at a much faster pace" to shift between civilian and military needs in case of crisis, a report by former Finnish president Sauli Niinistö warned on Wednesday (30 October). The EU should pursue an overarching strategy to ensure defence is “part of a broader strategic industrial ecosystem" that can be easily re-geared towards different objectives across the spectrum of civilian and military purposes, the report – which was requested by European Commission President Ursula von der Leyen in March – said. Read more. 

Audi plans to stop making EVs at an embattled factory near Brussels at the end of next February, the German carmaker and union representatives said on Tuesday (29 October). The automaker, a subsidiary of crisis-hit Volkswagen, earlier this year announced its intention to shut production of its high-end Q8 e-tron model at the site in Forest, south of the Belgian capital, but had not previously communicated an exact date. Read more.

Tuesday 29

The European Commission on Tuesday confirmed tariffs of up to 35.3% on Chinese-made electric cars, wrapping up a consultation period launched in October last year to establish whether Beijing's subsidies had undercut European competition. A senior Commission official told reporters in Brussels that persisting "broad disagreements over each and every fact" and "legal argument" around the original issue of subsidies – and how these were characterised – motivated Tuesday's decision. Read more.

Beijing has harshly criticised the European Commission's efforts to reach individual deals with carmakers affected by its EV anti-subsidy probe as tensions mount ahead of scheduled confirmation of definitive tariffs on Wednesday (30 October). China’s Ministry of Commerce warned that any attempt by Brussels to negotiate directly with Chinese automakers, including BYD, Geely, and SAIC, would complicate efforts to reach a negotiated settlement to the year-long trade dispute. Read more.

The European Commission on Tuesday said it had finalised discussions with Britain on an agreement that would allow both sides to cooperate directly in antitrust investigations. The agreement is the first that would allow national competition authorities from EU countries to cooperate directly with a competition authority outside the bloc. The agreement, which comes into force after both the EU and Britain have finalised their ratification procedures, will set out that important antitrust and merger investigations are brought to each other's attention, the commission said. Read more.

Monday 28

Leading European business organisations have called on EU policymakers to enact “profound structural changes” to boost the Union's competitiveness, warning that pursuing subsidies and tariffs risks discouraging innovation and sparking a costly “subsidy race” with China and the United States. Europe Unlocked, an umbrella group representing 19 influential European business associations, including the Confederation of German Employers' Associations (BDA) and the European Round Table for Industry (ERT), said on Monday that EU leaders should place open trade and market-driven investment at the centre of its economic strategy. Read more.

Volkswagen plans to shut at least three factories in Germany, lay off tens of thousands of staff and shrink its remaining plants in Europe's biggest economy as it plots a deeper-than-expected overhaul, the company's works council head said on Monday. Europe's biggest carmaker has been negotiating for weeks with unions over plans to revamp its business and cut costs. Plant closures would mark the first time ever the car giant shut down a factory on home soil - dealing a harsh blow to Germany's industrial prowess - and the first time since 1988 worldwide. Read more.