The European Union’s top trade official brings a suitcase full of proposals to persuade President Donald Trump to call off his trade war threats.
BRUSSELS — EU trade chief Maroš Šefčovič flew to Washington on Monday with a suitcase full of gifts that he hopes can buy peace with United States President Donald Trump and head off a spiraling trade war.
Promising a “package of cooperation” to the new administration in a bid to avert Trump’s tariffs, Šefčovič is expected to meet with Commerce Secretary Howard Lutnick, Trade Representative Jamieson Greer — both still to be confirmed in their posts — and Kevin Hassett, Trump’s top economic adviser.
The visit comes at a perilous time for the bloc, after Trump said he would reinstate duties on steel and aluminum next month, effectively canceling an earlier truce. He has also taken a step toward imposing reciprocal tariffs that would harm Europe’s exporters — especially the auto industry.
While Brussels has spent the last four years strengthening its toolkit of trade weapons, it wants first to attempt a deal with Trump. POLITICO details the carrots that Brussels could offer in search of a peace deal:
Stepping up gas imports
Trump’s obsession over America’s €198 billion trade deficit with the European Union is at the heart of his threats to impose hefty tariffs that could cost the bloc billions. However, his simultaneous pledge to “drill, baby, drill” for more fossil gas has raised hopes that European countries can head off the prospect of a trade war by buying more fuel from across the Atlantic — which could also help the bloc reduce its imports of Russian liquefied natural gas (LNG).
“Why not replace it by American LNG, which is cheaper for us and brings down our energy prices?” European Commission President Ursula von der Leyen asked in November.
In practice, though, EU countries like Germany have queried how much more American LNG the bloc can buy on top of existing volumes. At least one EU country is pitching the idea of a subsidy scheme to make American LNG cargoes more affordable in the name of energy security. But stumping up cash for fossil fuels would be controversial.
Meanwhile, industry voices are pushing for the EU package to include pledges not to punish importers of American fuel for methane emissions — given that Trump is poised to slash environmental standards at home, and energy giants could face heavy fines from European countries if they take advantage of the rule changes.
Making American cars cheaper
Trump’s complaints against the EU center on cars and the bloc’s 10 percent import tax on vehicles. The U.S. has a 2.5 percent tariff, though that rises sharply to 25 percent for light trucks.
The president has promised to erect reciprocal tariffs to match those of other countries, and to impose auto tariffs — while his advisers take the controversial view that European value-added taxes represent a de facto tariff that deserves a U.S. retaliation. While it’s unclear whether the auto-specific tariff would come on top of existing tariffs, any new trade barriers pose considerable risk to Europe’s automotive sector, especially Germany’s big three automakers.
The most obvious answer would be to lower the bloc’s tariffs to match those of the U.S., an approach that carmaker BMW and Bernd Lange, the head of the European Parliament’s international trade committee, have advocated.
Yet under global trade rules, any reduction in EU tariffs would have to apply to all of its trading partners. That would represent a win for China, whose electric vehicle incumbents are desperate for new markets. Following its anti-subsidy investigation, the Commission slapped new duties on made-in-China EVs last year.
Because they were enacted as part of an anti-subsidy investigation, those duties would remain in place even if the EU matches the U.S.’s 2.5 percent vehicle tariff, said Sam Lowe, a partner at Flint Global.
Teaming up against China
Officials in Brussels are starting to realize that Trump might not be the China hawk he appeared to be on the campaign trail.
The 60 percent tariffs he repeatedly vowed to impose on goods from China quickly turned into 10 percent (while he slapped 25 percent on free-trade allies Canada and Mexico — before suspending them for a month). Trump has also delayed a ban against China’s TikTok app.
Trump’s initial softball moves toward Beijing are setting off alarm bells across the EU, which has already taken steps to jointly tackle China’s market-grabbing practices, taking the view that this would better align Brussels with Washington.
Šefčovič has already suggested strengthening the EU’s focus on economic security, for instance in overseeing outbound investments in key technologies, such as artificial intelligence, semiconductors or quantum technology. It’s a step that Washington has already taken.
In another move that would echo Trump’s first term, Brussels wants to team up with the U.S. in tackling China’s so-called non-market practices, such as lavishing subsidies on companies or excluding Western firms from public tenders.
In 2023, Washington and Brussels tried, but failed, to set up a “green” metals club that would impose duties on steel and aluminum imports from non-market economies such as China. If the two sides can agree on the Global Arrangement on Sustainable Steel and Aluminum, that could lay to rest their tariff fight that dates back to Trump’s first term.
Buying those weapons
Getting European countries to buy more American weapons would have the added advantage of convincing the Trump that the bloc is serious about its own security, just as his administration is flirting with the idea of pulling troops out of Europe and has repeatedly called on EU countries to boost their defense spending.
The approach has gained traction in Germany and Italy and was floated last November by European Central Bank (ECB) President Christine Lagarde, who said that EU countries could, in a “cohesive” approach, buy weapons systems they can’t make themselves.
This idea would, however, likely face resistance in Lagarde’s home country, France, where President Emmanuel Macron is the most vocal proponent of the EU’s “strategic autonomy” and a strong backer of national defense champions like Dassault.
Washington meanwhile promised late last week to speed up arms shipments to Europe, acting on years-old frustrations among its allies about the slow process of buying American-made weapons.
And here’s what the EU won’t offer
Despite warnings from Washington, the EU doesn’t intend to veer from its path of regulating major tech companies, most of which are American, and won’t be open to negotiating on its tech legislation, according to a senior European lawmaker.
The enforcement of the bloc’s three main rulebooks governing U.S. tech giants like X and Amazon — the AI Act, the Digital Services Act and the Digital Markets Act — cannot be used to appease Washington in a trade conflict.
Brando Benifei, the chairman of the European Parliament’s delegation to the U.S., said “we cannot accept this approach, because we do not think that our legislation is part of a negotiation.” That’s why the EU isn’t requesting changes to the U.S. policy, he stressed in an interview with POLITICO.
Pieter Haeck and Caroline Hug contributed reporting.Graphic by Giovanna Coi.
