In the context of global trade tensions, Europe faces a threat from the US, which has issued an ultimatum regarding customs tariffs. In this pressure-filled negotiation, there is a rush to avoid trade confrontation.
Ultimatum and Customs Escalation
As July 9 approaches, set by Donald Trump as the deadline for a bilateral agreement, negotiations are intensifying between Washington and its trade partners, including the EU. French Minister of Economy Éric Lombard emphasized the seriousness of the situation, stating, "I hope we will have an agreement this weekend. Otherwise, Europe will probably have to show more strength in its response to restore balance." A delegation from the European Commission is currently in Washington attempting to diffuse the threat of tariff sanctions. Without a quick agreement, punitive measures will negatively affect European exporters.
Europe Called to Defend Itself: Towards a Return to Protectionism?
Lombard expressed the view that Europe must be prepared to respond firmly to US actions. He considers it "essential" for the Union to erect its own customs barriers against both the US and other economic powers like China, which are also accused of distorting the trading environment. He likened the current situation to "a playground where everyone plays hopscotch with supervisors and respecting the rules, but there are three bullies who arrive and no longer respect any rule." The bullies being identified are the US, China, and Russia.
Consequences of Trade Tensions
Uncertainty in the financial markets is also fueling moves towards alternative assets. Bitcoin, often seen as a safe haven amidst geopolitical tensions, could benefit from a tightening of trade relations. Additionally, an increase in customs duties could severely penalize European exporters and fuel imported inflation in Europe.
The trade tensions between the US and the European Union could lead to significant consequences for the global economy. An increase in tariffs and a return to protectionism may drive Europe towards greater strategic autonomy, both industrially and monetarily.
