Listen: Why Europe keeps giving in to Trump’s tariff threats

Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.

Find the full transcript below:

It had been a while since the American president last threatened Europe.

On Monday, Donald Trump threatened France with a 100 percent tariff on French wine unless it scrapped its digital services tax.

More than a year after Donald Trump’s tariff revolution, where do things stand? What tariffs are currently applied to European goods?

“Even Iran got a better deal than the EU.”

That’s how MEPs from the Left group in the European Parliament reacted after yesterday’s vote approving legislation that removes tariffs on a range of American products.

Let’s start from the beginning.

In February last year, you remember Donald Trump decided to impose punitive tariffs on the entire world, including Europe.

European negotiators later managed to secure a somewhat lower rate.

The deal was simple: the United States would impose a 15 percent tariff on European products while eliminating duties on a small list of industrial goods that are particularly important to the EU.

In return, the EU would remove its tariffs on a wide range of American industrial and agricultural products.

So yes, this is clearly a very asymmetric agreement.

But the commission’s objective was to secure a stable ceiling that would not keep changing, and to set it as low as possible. In other words, it wanted to bring predictability to businesses.

And yesterday, the European Parliament gave its final approval to the legislation lowering European tariffs, as foreseen. EU member states are expected to do the same in the coming days, meaning Europe will have fulfilled its side of the bargain.

What about the United States? Has it respected the agreement?

I could give ya nuanced answer, but I’ll simply say: no.

In the weeks following the Turnberry agreement, the US administration did apply the agreed 15 percent tariff to European goods. It also reduced tariffs on vehicles, as the deal provided.

But at the very same time, it imposed a 50 percent tariff on aluminium and more than 400 aluminium-derived products from around the world, including Europe. This was an outright violation of the agreement.

So why would the US do that?

Because the United States launched a series of investigations into imported products that supposedly threaten domestic industries. We’re talking about sectors such as automobiles, steel and aluminium, pharmaceuticals, and more.

And according to Trump, these investigations—and the tariffs that result from them—fall outside the agreement reached with Europe.

Europeans, however, understood the contrary. They believed the 15 percent rate was an absolute ceiling. That’s how the European Commission presented it.

And over the past year, Trump has continued to issue one tariff threat after another—first on cars, then more recently on French wine.

It’s also worth remembering that this goes beyond purely industrial concerns.

The United States is using trade pressure to push back against Europe’s digital regulations. The fines imposed by the EU on tech giants such as Google, Apple and Meta, as well as the digital services taxes introduced by some European countries, are all things Donald Trump strongly opposes.

As you’ve probably guessed, there is never really an end to these demands.

So why, despite all this, is the EU still lowering its tariffs?

Because Trump’s threats work.

European exporters worry about every additional percentage point of tariffs.

Over the past year, steel exports to the United States have fallen by 34 percent.

As a result, European businesses are putting pressure on policymakers to accommodate American demands.

EU member states are following this line, they even convinced the European Parliament to remove language that could be seen as confrontational toward Washington.

For example, many MEPs wanted Europe to wait until Trump reduced tariffs on aluminium before eliminating European duties.

But under the final agreement, Europe will open its market immediately and give the United States until the end of the year to lower aluminium tariffs.

That means American products will benefit from preferential access to the European market while Europeans wait for that promise to materialize.

Which explains why some political groups are struggling to accept the deal.

So what happens next?

It’s worth remembering that even under US president Joe Biden, the EU failed to negotiate a lasting agreement on steel and aluminium. So with Trump, expectations are understandably low.

The alternative would be retaliation—imposing punitive measures on American goods.

But Donald Trump is not particularly receptive to economic arguments. Above all, he wants to win a political showdown.

And for now, the EU believes enough damage has already been done to European industry and that escalating the conflict would only make things worse.