US President Joe Biden reacts at the start of the European Union (EU) summit at the EU Headquarters, March 2022. File photo.
European leaders loudly celebrated Joe Biden’s November 2020 election victory, expecting him to bring the era of Trump-style ‘America First’ economic nationalism to an end. Three years later, the bloc is facing its worst economic crisis since World War II, in no small measure thanks to the Biden administration’s policies.EU officials are reportedly drawing up a contingency plan for Donald Trump’s return to power.An anonymous official familiar with the preparations told Bloomberg that the European Commission is working on an “impact assessment” of the consequences of a potential Trump win, based on the candidate’s threats to slap the bloc with a series of tough new trade-related restrictions designed to address the perceived unfair treatment of American businesses, and Brussels’ supposed softness on China.
The Trump team’s proposed measures include a 10 percent tariff on European goods, designed to boost US manufacturing, plus a response to European digital services taxes targeting American tech giants, and other measures meant to balance the lopsided trade relationship with the EU, with whom the US has had a deficit topping $200 billion for over three years running.
In response, Brussels is reportedly considering steps to try to assuage Trump’s hostility, including a “charm offensive” by senior officials reaching out to his team and expressing readiness to “work with” the Republican.But others seemed resigned to worsening ties, with German financial giant Deutsche Boerse warning that only “strong checks and balances” would be able to prevent Trump from making a pig’s breakfast of the transatlantic economic relationship.This sentiment was echoed by European Central Bank chief Christine Lagarde last week. Lagarde warned that Europe should prepare for “threats” to Europe’s economy if Trump returns to power. “Let us prepare for potential tariffs, for potential harsh decisions that would be unexpected. Let us be strong at home,” she urged, suggesting that Brussels could prepare for Trump’s comeback by more closely integrating its single market regime (which would further strip bloc members of any semblance of economic sovereignty).EconomyNo Relief for Europe’s Two Major Economies as Early 2024 Shows a Bleak Start24 January, 16:55 GMT
Has Biden Been Better?
German Chancellor Olaf Scholz, the leader of Europe’s largest industrial economy, came out publicly in support of Biden’s reelection last spring, saying “the current president is better, so I want him to be re-elected,” and that Biden’s years of experience as a politician means he knows “what you have to do to prevent the world from going to war.” Trump, by contrast, according to Scholz, “stands for a great division in the country,” and “if all people are only against each other, then there cannot be a good future.”Leaving aside the fact that the planet is now far closer to a global conflagration than it was in January 2021, due in no small part to the Biden administration’s efforts to set Eastern Europe, the Middle East, East Asia and the Korean Peninsula on fire, European officials’ hopes about Biden restoring the pre-Trump transatlantic economic relationship haven’t exactly panned out, either.While European businesses were harmed by the Trump tariffs, which ranged from steel and aluminum to washing machines, cosmetics, clothing and food, the Biden administration’s push to kick off a proxy war with Russia in Ukraine, and a subsequent spike in energy costs, have had a far greater impact on the bloc’s economic prospects, leaving it slipping in and out of recession for nearly two years now.© Photo : Trading EconomicsTrading Economics chart showing Eurozone’s economic performance in the roughly two years since the outbreak of the NATO-Russia proxy war in Ukraine.Trading Economics chart showing Eurozone’s economic performance in the roughly two years since the outbreak of the NATO-Russia proxy war in Ukraine.Furthermore, while the Biden White House did resolve a longstanding dispute over subsidies to US and European civilian airliner manufacturing, and suspended Trump’s steel tariffs, European officials and businesses couldn’t help but notice the Biden administration’s $390 billion Build Back Better ‘green’ subsidies package, which has incentivized dozens of major European companies to relocate to the US.In November, global consulting giant Deloitte reported that two out of every three companies from European manufacturing superpower Germany had been forced to at least partially relocate their operations abroad due to soaring energy costs, and that each third industrial company had plans to transfer production and preassembly activities abroad.EconomyGermany to Provide Over 7Bln Euros in Military Assistance to Ukraine Amid Economic Recession16 January, 19:53 GMT“Deindustrialization is already taking place on a considerable scale here. If the general conditions remain the same, it is very likely that more companies will follow and more and more important parts of the value creation [stream] will migrate,” Deloitte partner Florian Ploner warned.© Photo : GMK CenterDeclining steel production in Europe stemming from the crisis in Ukraine.Declining steel production in Europe stemming from the crisis in Ukraine.A recent Sputnik review citing Eurostat data found that European Union countries have been forced to shell out some €185 billion ($198.8 billion US) extra on natural gas over the previous 20 months after signing on to the shortsighted US-led effort to cut themselves off from cheap Russian pipeline gas.Meanwhile, some opposition figures have complained about US silence over the September 2022 attack on the Nord Stream pipeline network, which deprived Germany and Europe of a major new source of Russian energy, resulting in higher production costs, soaring inflation and declining attractiveness of the region for manufacturing activities.Some of the EU’s major economies have taken quiet steps to reign in the outflow, with France moving to block a US buyout of a major nuclear reactor parts supplier amid efforts by US companies to take control of the European energy sector. Meanwhile, US liquefied natural gas exports to the bloc have soared amid the drop in Russian supplies, with Russia’s energy minister estimating these deliveries to cost at least 30-40 percent more than Russian pipeline gas.President Putin warned in May of 2022 that the EU’s “suicidal” and “absolutely political” decision to listen to the US on the purchase of Russian energy supplies would cost the bloc in the long run, “seriously – and accord to some experts irrevocably – undermin[ing] the competitiveness of a significant part of European industry, which is already losing the competition to companies in other regions of the world.”© Photo : US Energy Information AdministrationUS LNG exports to Europe, seen here enjoying a huge boom in deliveries to Europe amid American companies’ efforts to at least partially displace Russia.US LNG exports to Europe, seen here enjoying a huge boom in deliveries to Europe amid American companies’ efforts to at least partially displace Russia.