How Trump’s stance on trade is dragging down Europe

PARIS — At least two of Europe’s most powerful leaders, Jean-Claude Juncker and Angela Merkel, have ideas about how to strengthen the EU to bolster its borders and economy. And they don’t think they need to rely on Beijing.

Merkel is calling for the European Union to not only overhaul its trade deals, but to create a “Marshall Plan” to help impoverished African countries prosper through the development of infrastructure, including deep-water ports.

She’s joined by Juncker, the head of the European Commission, in urging a more robust defense system and a political role for the European Investment Bank, whose board is currently dominated by European governments.

“There is a period of doubt about Europe,” Juncker said last week after helping inaugurate a bridge across the Rhine that was funded with a loan from the European Investment Bank. “That’s why we must get a great deal done together.”

Europe is stuck, Juncker and Merkel say, between global economic expansion and the specter of economic slowdown. The Trump administration’s “America First” agenda is causing uncertainty about the US’s economic role, and the growing populist threat in Europe — the election of Emmanuel Macron as president of France, and the beginnings of a push to break up the eurozone — are hitting businesses, government officials and the general public alike.

Merkel and Juncker, who are separate leaders of the European Union and Germany, are linked by the singular theme of strengthening the EU. Merkel can be tough, but she also is considered a calming force at Europe’s top political and economic forum, called the G-20. Juncker, by contrast, is unpredictable and rarely takes positions on controversial issues.

Their comments about EU reforms came on a weekend conference call with reporters, during which the leaders also discussed how to ease relations with their most important trading partner.

“We want the European Union to remain strong,” Juncker said. “We must develop a common economic policy. Otherwise,” he continued, “there is no chance of a common policy in any regard — whether in trade, in security or in energy policy.”

Merkel supports Juncker’s plans, and said she’d be willing to launch a public-private partnership to fund large infrastructure projects. The president of the European Investment Bank, Werner Hoyer, was in Washington earlier this year and told Congress that European countries have the financial means to help develop Asia’s infrastructure. But the bank itself is completely dependent on the money it brings in from lending, with no need to raise money internally.

Merkel and Juncker both warned against the threat of economic disruption posed by escalating trade tensions. US President Donald Trump has promised to slap retaliatory tariffs on China in a months-long trade battle. And Trump has cited Europe’s large trade surpluses with the US as justification for slapping 25 percent tariffs on steel imports and 10 percent on aluminum imports.

“If, for example, one were to get into a trade war, we would certainly get a shock,” Juncker said. “We are concerned about the US tariffs on steel and aluminum.”

Last week, Trump issued his most forceful threat yet against Europe, slamming France for welcoming economic migrants and Africa’s central banks for refusing to provide funds for infrastructure projects. On Sunday, French President Emmanuel Macron launched an initiative to overhaul the African economy and stimulate development of trade between the continent and Europe.

The EU, the statement said, can help other countries with “effective credit lines,” in addition to other types of financial assistance. That’s something that Merkel said, last week, the world “has to have a Marshall Plan for Africa.”

Leave a Comment