The European Union is bracing for potential economic fallout as it prepares for the return of Donald Trump to the White House, with fears of a renewed trade war and “Trump tax”.
Ursula von der Leyen has already proposed a new strategy to counter Trump’s threat of tariffs – buying more liquefied natural gas (LNG) from the US.
Von der Leyen’s plan aims to reduce tensions and maintain cooperation between the EU and the US as Trump has previously promised to impose tariffs of up to 20% on foreign goods to protect American jobs.
“First of all: engage,” she said, referring to her phone conversation with Trump. “Secondly, discuss common interests and then go into negotiations.”
The EU previously took similar steps during Trump’s first term to avoid tariffs by increasing imports of US LNG and soybeans.
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Von der Leyen pointed out that the EU still relies heavily on Russian energy and asked: “Why not replace it by American LNG, which is cheaper for us and brings down our energy prices?” This move could also address the trade deficit Trump has often criticised.
However, analysts believe that von der Leyen’s LNG proposal might be more symbolic than practical.
Laurent Ruseckas from S&P Global told Politico that the EU doesn’t directly purchase LNG.
He added: “There’s a global LNG market and LNG buyers have their own contracts.
“It’s possible to do a memorandum of understanding to talk about increasing purchases, but it’s more a political statement.”
Meanwhile, European leaders are preparing for difficult talks if Trump moves forward with new tariffs, similar to the 2018 tariffs he placed on EU steel and aluminium.
Emmanuel Macron and German Chancellor Olaf Scholz held discussions to present a united European front, with Macron stressing the importance of a “more sovereign Europe” that can stand up for its interests while cooperating with the US.
Germany, one of Trump’s primary targets, could see significant impacts, as it faces a potential trade deficit with the US that is expected to hit record levels this year.
The Federation of German Industry (BDI) warned that new tariffs “would massively damage not only Germany and the EU, but also the US economy.”
In response, Bernd Lange, the chair of the European Parliament’s international trade committee, promised the EU would stand its ground.
He said: “If the US side imposes unjustified tariffs on EU products, we are prepared for this and will react.
“If Trump goes ahead with his announced tariff fantasies, then we will bring him back to reality and defend ourselves.”
