Insight
What would a Biden presidency mean for US-EU trade relations? by Sam Lowe, 28 October 2020
Joe Biden in the White House would remove the threat of a US-EU trade war from the table, and open up new areas for co-operation. But the US and EU would still disagree on many issues, particularly how best to deal with China. The EU’s trade relationship with the US has suffered during the tenure of President Donald Trump. Trump’s obsession with bilateral trade deficits, and his perception that the EU takes advantage of the US, have led to him using national security concerns as an excuse to levy tariffs on EU steel and aluminium exports – while continually threatening to do the same to European cars. The EU’s response to Trump’s unorthodox trade policy has been to strike mini-deals (such as the recent decision to remove tariffs on American lobsters in return for the US reducing tariffs on cigarette lighters) where necessary, to avoid further escalation, but otherwise wait him out in the hope that someone more amenable will replace him. A Joe Biden victory on November 3rd would vindicate the EU’s strategy and bring to an end the chronic economic uncertainty associated with Trump and his propensity to lash out with tariffs. A Biden presidency would offer an opportunity to re-set the US-EU trade relationship, and open up some new opportunities for productive co-operation. But the Biden approach may not be as pro-free trade as the EU would like, with protectionist rhetoric around Buy American provisions featuring prominently in his campaign. And the two powers would continue to disagree on many issues, particularly on how best to deal with China. Trade policy is unlikely to be a top priority for a Biden administration that would be tasked with mopping up the economic wreckage of COVID-19. And when trade does enter the discussion, domestic political pressure will probably centre on efforts to re-shore some medical and other critical supply chains, bring China into line, and bolster American influence in the Asia-Pacific region. However, Biden and the team around him are keen to re-build bridges with the EU, and mend some of the damage caused by Trump. This would mean that Trump’s threat of national security tariffs on imports of European cars would probably be taken off the table once and for all, and the chances of the US removing its tariffs on imports of EU steel and aluminium (as well as imports from other allies such as Canada, Japan and the UK, but probably not China) would be high. CER INSIGHT: What would a Biden Presidency mean for US-EU trade relations? 28 October 2020
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