Trump’s
tariff war is imminent, Macron and Draghi warn Europe
French
president calls Trump’s election “a moment of acceleration.”
November 13,
2024 8:56 pm CET
By Giorgio
Leali
PARIS —
Mario Draghi and Emmanuel Macron delivered a sharp wake-up call to Brussels on
Wednesday, insisting Europe needed to prepare fast for the impending second
round of a trade war with Donald Trump.
In an
hour-long conversation at the prestigious Collège de France in Paris, the
Italian former chief of the European Central Bank and the French president
urged the EU to stand on its own two feet to avoid being a collateral victim of
a trade war between the U.S. and China that looks liable to explode in the
coming months.
Trump is
pledging to bring down America’s yawning deficits by slapping duties of 10
percent to 20 percent on all imports, and of 60 percent on those from China.
It’s a recipe that risks triggering even greater trade chaos than the tariff
wars against China and the EU that shaped his first presidency.
“We are very
clearly entering a world of tariff wars,” Macron said, warning that Europe
still needs to figure out “how we will be caught in the trade war” between the
U.S. and China.
The French
president said Trump could be out to “force the Europeans to separate faster
from China” by threatening duties against Europe if it keeps trading with
Beijing. That risks deepening divisions among EU countries that have closer
commercial ties with China and those closer to Washington, he added.
Macron’s
comments echoed an earlier warning by Draghi. “With a tariff wall ... if you
are a friend, you are in. If you are not a friend, you are out. And I am going
to judge you on whether you want to be a friend,” the former Italian prime
minister said, explaining that Trump will pressure Europe to pick a side
between the U.S. and China, and that in any case “there will be more tariffs.”
Mario Draghi
and Emmanuel Macron urged the EU to stand on its own two feet to avoid being a
collateral victim of a trade war between the U.S. and China. | Pool photo by
Teresa Suarez via AFP/Getty Images
Trade
experts and other observers are split over whether the U.S. intends to play a
game of divide-and-conquer by using tariff threats to extract concessions, or
whether the new president is actually committing to a far deeper program of
economic isolationism through universal tariffs to protect American jobs. A big
role for former U.S. Trade Representative Robert Lighthizer is seen as likely
to suggest the latter.
Draghi, who
in September delivered his recommendations on how to save the European economy
from a slow decline, called Trump’s election “a wake-up call” and said that
Europe must now “work more intensively than we might have planned to do
before.”
Trump’s
victory has disquieted EU capitals, with Brussels bracing to hit back fast and
hard against the U.S. president-elect’s tariffs.
The Trump
administration “will continue to protect [its interests] at the risk of
dismantling value chains between Europeans and Americans,” Macron warned, while
urging Brussels to take action with a more aggressive trade policy of its own,
building on the example of recent EU tariffs on Chinese electric vehicles.
“Trump’s
election is a moment of acceleration. The longer we wait, the more we will face
dilemmas that are impossible to solve,” he warned.
Speaking at
the storied college, which was founded in 1530 by King François I, the
Franco-Italian duo lost no opportunity to flaunt their friendship, with Macron
publicly celebrating Draghi’s leadership and the two delivering carefully
aligned messages on what Europe should do.
In
particular, they both criticized the EU’s current economic doctrine, saying
leaders should find the courage to invest more in strategic sectors and to
create a real capital markets union to fund disruptive technologies.
While
criticizing U.S. protectionism, the two repeatedly compared Europe to the U.S.
and urged Brussels to take inspiration from Washington, especially on directing
private capital toward strategic sectors. Europe should catch up with the U.S.
by boosting funding for innovative companies via capital markets instead of
bank loans, they said.
“Banks are
not good at all at financing innovation,” as Draghi put it.
While
deploring EU red tape, a stance that previously earned him the praise of U.S.
billionaire Elon Musk, Draghi said Brussels should “get rid of [the] useless
regulation” that is pushing companies, especially in the tech sector, to quit
Europe.
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