Alternatives to the Tariff War
As the EU negotiates with the US government, a more progressive approach is needed.
Donald Trump’s tariff policy is rocking the foundations of neoliberal globalization, and this is exactly what he wants. According to the US President, the last 30 years of globalization have left the US (relatively) short-changed, but with his new tariff policy, Trump wants to restore the US’s former status as an undisputed global hegemon.
A closer look at Trump’s claims can shed light on whether or not this undertaking might actually prove successful. Even neoclassical economists acknowledge that, under neoliberal globalization, there will be economic winners and losers. In the US, traditional industry workers count among those suffering the greatest losses — their work is now being outsourced to the Global South for much lower wages and under worse working conditions, while capital, tech, and finance corporations are profiting off of their dominance in specialized technology.
As production was relocated abroad, social inequality and dissatisfaction grew in the US, which Trump has used as political leverage. The biggest thorn in the President’s side is likely those countries that have managed to increase their gross domestic product (GDP) as a result of globalization, thereby catching up to the US. We’re talking first and foremost about China, but this also includes other so-called newly industrialized countries. Faced with the growing strength of these other countries, the US experienced a relative loss of economic and political clout. Incidentally, the fact that Trump is less concerned with domestic inequalities is evident in his almost complete lack of industrial policy measures to bring back outsourced production or to build up new production capacities at home, as Joe Biden tried to do with the Inflation Reduction Act.
Now Trump is especially keen to force new competitors to the negotiation table by raising tariffs, and this strategy seems to be working, at least for now. What exactly is being negotiated, however, remains largely unclear. What is certain is that it is not only about tariffs, but also economic and (geo)political relations, as well as the position of the US in general.
US-EU: A Tense Relationship
Current relations between the US and the EU are still shaped by the failure of the Transatlantic Trade and Investment Partnership (TTIP), which was withdrawn in 2016 under great pressure from civil society organizations. However, despite this failure it is clear that Trump’s main concern is not the supposedly exorbitant tariffs the EU imposes on US goods. After all, in the period leading up to Trump’s abrupt tariff hikes and threats, EU-imposed tariffs stood between a mere 1 to 3 percent, and this is precisely why the US President chose trade inequalities between the EU and the US as his starting point. The catch is that even though the EU exports far more goods to the US, the US has a high surplus in service exports. This means that although the EU has a slight trade surplus overall, the inequality is far less marked than we are led to believe by the US government’s exclusive focus on the trade of goods.
The EU’s problem now is that goods to the US account for twenty percent of their exports. This makes the US their biggest trade partner, and the threatened tariffs on exports stand to cost the EU some 549 billion euros. Even potential concessions in this tariff dispute — EU Trade Commissioner Maros Šefčovič spoke of additional purchases of liquid gas (LNG) and soybeans to the tune of 50 billion euro — would prove very expensive for the EU.
The exact details of the negotiations remain hidden from the public, although from the sparse information that is available, we can deduce what the US government is aiming for. First, they want to increase their own exports — mainly energy, weapons, and agricultural products. Second, they want the EU market to be more accessible to US products. To achieve that, the EU would have to lower its environmental, climate, and health standards, which currently complicate or prohibit the introduction of certain products into the EU market — the infamous TTIP-era “chlorinated chicken” debacle comes to mind. Third, the US government wants to strengthen domestic automotive and machine production, with the expectation that European companies will expand their production capacities on US soil.
The EU’s Next Move
The EU is currently taking a markedly calm approach towards foreign relations and — unlike the Chinese government — is abstaining from making any blatant displays of opposition. Instead, it is focusing its energy on making offers to the White House — in addition to the aforementioned offer of a 50-billion-euro trade package, the EU announced counter tariffs that were lower than expected, and there was even talk of economic support in the dispute with China. What exactly that would look like, however, remains unclear.
Meanwhile, the EU is also pursuing a strategy aimed at strengthening trade relations with other partner countries. The list of trade agreements that Brussels hopes to finalise in the coming months is significant: the Mercosur agreement with Brazil, Argentina, Paraguay and Uruguay, as well as trade agreements with Mexico, India, Indonesia, and the Philippines, among others. To these we can also add raw materials partnerships and agreements aiming to secure the EU’s geopolitical interests. What all of these agreements have in common is that they will be signed more quickly, less democratically, and with less transparency than would have been done in the past.
It should not be forgotten that situations of upheaval always also offer opportunities for left-wing movements.
However, there is an even deeper fundamental problem at hand. EU decision-makers are blindly clinging to their own, long-since-failed neoliberal promises and policies. In fact, none of the (semi-publicly discussed) suggestions from Brussels would actually contribute to increasing the economic and political resilience of the EU.
One might see the EU’s stubbornness as being consistent with the status quo. In reality, though, the events since Trump’s first “small” trade war in 2018 — the COVID-19 pandemic, the war in Ukraine, the climate crisis and now Trump’s “Liberation Day” — have revealed to the world how vulnerable the global neoliberal trade system of the past 30 years really is.
A more resilient response would be to make the European economy more independent, ecological, socially focused and needs-oriented, while at the same time negotiating and establishing international trade agreements on an even playing field.
Resistance to the New World Order
It should not be forgotten that situations of upheaval always also offer opportunities for left-wing movements. Such movements can build off of their successful campaigns against neoliberal trade policy and call for a progressive change of course in hotly contested areas. To achieve this, however, it is crucial to stand in opposition to the protagonists of nationalism and protectionism — both in the US and the EU. We must demand fair trade agreements and balanced international institutions, as well as regionalisation and a focus on the needs of the European economy.
Furthermore, there is the question of how to build up oppositional power. Twenty-five years ago, the leftist antiglobalization movement started focusing its attention on the institutions of neoliberal globalisation — the World Trade Organization (WTO), the International Monetary Fund (IMF), the G7 and G20. The WTO, IMF, NAFTA and FTAA, TTIP, and TPP were all just technical, unsexy acronyms until activists revealed what was going on behind their doors: humanity and Mother Nature were being sold out through trade agreements in favour of corporate profit. In doing so, the movement demonstrated that trade policy can be criticised, and changed, from an internationalist position. However, even during the left-wing movement’s brief high point, there was a shortfall in the comprehensive development of transnational relations and organising efforts.
After a quarter century of critiques against globalization, the other side has also learned some lessons. The times and places for decision-making have been changed or disguised, and centres of power have shifted. Some institutions have lost their influence, while a select few countries and corporations have amassed a significant amount of power. This also explains why protests against summits and new trade agreements have recently become relatively small. This raises a number of questions for all of us: Where and when are decisions made today? Who are the decision-makers? What does innovative protest look like? What allyships are needed to make it happen? And how can we clearly explain what all of this has to do with the destruction of our livelihoods?
Our Alternatives
In addition to answering these fundamental questions, we should take a closer look at Trump’s policies, especially given that they involve highly divisive areas such as energy, automotive production, agriculture, the defence industry and big tech. Where do we stand on these issues?
Luckily, and thanks to the climate justice movement, there are already existing networks and strategies in place for the energy and (automotive) mobility sectors. However, it is important to continue the work in these areas and further develop our demands. Particular attention should be paid to already existing international networks, such as the European Gas Conference, the SOS Amazônia Campaign and the fights against the East African Crude Oil Pipe Line (EACOP).
For the European Left, the important thing is not to lose sight of the end goal.
There is also no need to reinvent the wheel when it comes to agriculture and food sovereignty, as there are already historical connections between small-scale farmer movements, such as the Via Campesina and the Brazilian movement of the landless (MST), and international trade networks. The Nyélélin Movement has, in recent years, developed a broad base of grassroots work around the topic of food sovereignty, which offers important starting points for resistance regarding issues such as genetically modified organisms (GMOs), agricultural imports, and attacks on biodiversity or environmental conservation efforts.
When it comes to (re-)armament policy, however, the situation is somewhat more complicated. Work has started in this area as well, even if discussions in the field seem to do little more than provoke arguments (though it would be a mistake to believe that things were any different in earlier peace movements). What we need to regain is the conviction that peace is an idea that can both unite our struggles and inspire the masses.
The left-wing movement had very little experience in dealing with big tech, but they still were not starting from scratch. From the workers’ perspective, there is experience resisting Amazon and Apple, the exodus from Twitter/X and protests against Tesla are gaining momentum, and there are also concrete alternatives and organizing around data protection and planned obsolescence. What is nevertheless still lacking are practical proposals for collectivization and democratization.
Currently the outcome of the tariff dispute remains to be seen. There are various factors that could influence how negotiations progress, such as developments in US domestic affairs — from the demands of Wall Street to the wrath of Trump’s voter base — or the behaviour of China and other BRICS countries.
For the European Left, the important thing is not to lose sight of the end goal. Regardless of whether current trade policy is neoliberal or protectionist in nature, as long as its priority is not providing a good life for everyone, we have to demand change, continue to develop our own alternatives and strengthen our networks. There is much to be said for focusing on highly controversial issues. Fortunately, this is work which has already begun.
Theresa Kofler is Coordinator of the platform Anders Handeln, a large confederation of Austrian civil society organizations and unions that advocate for an alternative approach to commercial trade.
Translated by Guerilla Media Collective.