Piraeus concerns. The shipping crisis in the Red Sea is having a direct impact on the port of Piraeus, one of Europe’s largest in traffic terms. Major players in the sector have stopped the three weekly routes from Asia to Piraeus, generating concerns over delays in the supply of the Greek market from the stoppage of container forwarding.
Donald Trump’s tariffs are a headache for all his trade partners. But the US president’s plan to impose ad hoc “reciprocal” levies on imports are a particular problem for the European Union. By enabling him to target whichever countries in the bloc he pleases, it could put the 27 member-states’ unity under severe strain.
The European Commission represents the bloc on trade and has a united front when it comes to tariffs. Say Trump decides to place a 25% levy on imports of European cars, as Goldman Sachs analysts expect. EU Trade Commissioner Maros Sefcovic can speak for all member states in formulating a trade response.
Even in this straightforward case, the EU has a weakness. Over 80% of the bloc’s 156-billion-euro trade-in-goods surplus with the U.S. stems from Germany and Italy, with a big chunk coming from car exports. Many member states don’t have a surplus at all, and the likes of Spain import more than they export. Hence a Brussels tit-for-tat response helps Berlin and Rome, but constitutes wasted negotiating capital for everyone else.
Assuming they actually get deployed, Trump’s “reciprocal and fair” tariffs could amplify that vulnerability. They may allow the US to unilaterally target trading partners, even if they are part of a wider bloc. All that’s needed is to transgress five criteria, which include taxes but also any structural impediment Washington deems “unfair.”
Imagine Trump slaps a blanket 50% tariff on all imports from Denmark, to punish Copenhagen’s temerity in refusing to hand over Greenland. Unlike an EU-wide levy, it wouldn’t hurt any of the other 26 member-states at all. The likes of Germany, France and Spain would have limited incentive beyond solidarity to anger Trump by placing counter-tariffs on US imports.
Reciprocal tariffs could extend far beyond Greenland-style spats, though. Trump may decide to punish certain member-states for having higher “unfair” rates of value-added tax, which he has decided punishes US exporters. He could also single out the likes of France, which levies digital services taxes on US big tech groups, for treatment.
Europe isn’t completely powerless. Individual EU states could try to placate Trump via non-tariff goodies. Germany, for example, could nudge Volkswagen to make more cars in the US instead of Mexico.
Still, EU officials already face the difficulty of trying to get member states to spend more on defence, even though not all of them are right next to Russia. If Trump uses his reciprocal tariff system to go after some European states but not others, it will make coordinating an effective EU-wide trade response to his aggression much harder – and may make those on the receiving end of punitive treatment wonder why they are in the bloc at all.
The author is a Reuters Breakingviews columnist. The opinions expressed are their own.