Insight
One year liberation day: The delusion of transatlantic economic divorce by Sander Tordoir, 7 April 2026 A year after Liberation Day, Washington and Brussels are still fighting each other – not China. Liberation Day was meant to reset global trade. It has not. America’s fiscal and trade deficits remain near record highs, while China’s export surge continues unchecked, with Europe increasingly exposed. Washington misdiagnosed the problem, hitting allies as hard as rivals, and in doing so weakened the coalition it needs to address China’s distortions. The transatlantic relationship was further damaged when the United States threatened to invade Greenland and then went to war against Iran in concert with Israel, sending an energy shock through the economies of its allies in Europe and Asia. Both sides of the Atlantic may now look to unwind their economic interdependence. The EU-US economic connection remains the world’s largest, however, with roughly $1.6 trillion in annual trade and several trillion in cross-border investment. European investors (including European custodians holding assets for international investors) alone hold around $8 trillion in US debt and equities, while Chinese investment in Europe is a fraction of that. The task is not to unwind interdependence but to manage it. That means rebuilding transatlantic co-ordination, sector by sector, around shared exposure to the distortions caused by China. Global imbalances had been widening long before the second Trump administration took a sledgehammer to the trading system. The global economy rests on an unstable equilibrium: Chinese supply – fuelled by industrial subsidies worth 4.4 per cent of the country’s GDP – pairing with debtfuelled US demand. Last year, Washington signalled it would no longer sustain this equilibrium and imposed broad tariffs on allies and rivals alike, culminating in Liberation Day. As with its other trading partners, Washington went to great lengths to highlight Europe’s overall trade surplus, particularly in goods. It also pushed back against what it sees as regulatory discrimination CER INSIGHT: ONE YEAR LIBERATION DAY: THE DELUSION OF TRANSATLANTIC ECONOMIC DIVORCE 7 April 2026
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