President Biden’s administration continues to mishandle the complexities of international trade. Despite the fact that transatlantic relations hold the potential for a storm of conflict designed by his predecessor, Biden seems to be blissfully free of any coherent plan for addressing the issue. There is anticipation of a revival of the historical ‘Chicken War’ from 1965, which occurred when President Lyndon Johnson countered European import restrictions on chickens by enforcing a 25% tariff on imported trucks – an action that undoubtedly escalated the popularity of pickup sales and is still operative.
As of now, a whopping seven problematic areas lie dormant within this transatlantic tension, spanning across trade, regulations, and security. Although these topics hold significance, they also offer chances for Biden to step in and leverage his diplomatic skills. In 2022, however, the U.S. trade deficit of goods and services with the European Union surpassed a staggering $130 billion.
The European Union seems to harbour the misconception that the solution lies in merely buying more liquified natural gas or agricultural products. That, or perhaps increasing the scale of EU companies’ investments in the US might just do the trick, they think. Meanwhile, a historic bone of contention remains: the US enforces a 2.5% tariff on imported cars, strikingly less than the EU, which imposes a 10% tariff on US car imports.
This disparity puts U.S. automakers at a clear disadvantage in European markets. In addition, the EU places high tariffs on certain US agricultural produce, while the latter puts lower tariffs on equivalent EU products. This unfair game of tariff seesaw ought to have been a priority for Biden, yet he conveniently overlooks the detrimental impact on U.S. interests.
Recall Trump’s efforts in 2018, when he sought to secure domestic steel and aluminum manufacturers by introducing a 25% and 10% tariff respectively imposed on the EU, Canada, and Mexico. Yet, Biden merely painted over this with a truce, lifting the tariffs yet maintaining import quotas on EU steel and aluminum exports. Simultaneously, Brussels lifted its duties on the US imports, which was hailed as a victory in some narrow-minded circles.
Another contender for a brewing conflict is the EU’s rise as an intimidating regulatory authority overseeing the global tech industry – a move that was bound to ruffle Trump’s feathers. Since 2016, the EU has launched a swath of sweeping regulations, including the inception of the General Data Protection Regulation (GDPR) that aims to safeguard data privacy.
The United Kingdom’s departure from the EU in 2020 saw the removal of a voice that had previously pushed back against precipitous regulations within the bloc. Following this, in 2022, the EU delivered three digital regulations. The Digital Services Act (DSA) aimed at enhancing the accountability of online platforms for their hosted content while the Digital Markets Act (DMA) intended to regulate considerably influential online platforms. To encourage data sharing, the EU propagated the Data Governance Act (DGA).
These abrupt regulatory moves were intended to keep significant global trade players, such as the United States, on their toes. President Trump’s supposed dismissive attitude towards NATO or any possible attacks on its members, along with his skeptical stand on aiding Ukraine, roused more discontent in Brussels. The looming possibility of a trade war with Trump already had the Europeans on edge.
There were also financial dimensions to Trump’s stance on European security. He increased the NATO member defense spending target to 5% of GDP, an initiative met with varying views between member nations. While nations like Poland and Lithuania readily embraced this bracket, other countries were more reluctant.
Any peace agreement with Ukraine would likely implicate increased European assistance, potentially including troops. For this to become a viable plan, Europe would need to align more closely with the United States’ view on disbursing blocked assets for Ukraine’s restructuring. However, Biden has yet to demonstrate the leadership or vision required to manage these international tensions effectively.
Trump’s aspiration to acquire Greenland, a self-governing province of Denmark, established yet another area of contention. The Europeans, initially considering Trump’s intention to acquire the world’s largest island as a mere jest, were compelled to reevaluate their stance. Leaving them puzzled, and perhaps anxious, as to what Trump might demand next.
Europe’s primary concern revolves around deciphering Trump’s desires. Perhaps the reprise of a trade war could be sidestepped by just promising larger purchases of energy, soybeans, and military equipment from the US and enhancing EU companies’ investment in US production facilities. But even in this scenario, Biden’s lack of strategic clarity remains a serious concern.
The more pressing question perhaps, does Biden want something bigger, something that could reconfigure European policy on a broader scale in line with his preferences, just like Trump? Given Biden’s track record, it is highly doubtful that he has the foresight or the courage to push beyond conventions and transform transatlantic relations for the better.
The trade disputes, regulation controversies, and security issues surrounding the transatlantic relationship remain significant challenges that demand effective leadership. However, it remains to be seen if Biden and his administration can rise to the occasion and demonstrate the diplomatic acumen required to navigate these complex issues. Inaction or ineffective actions may simply serve to uncover more fronts of tension and conflict.