EU-US: Brussels concessions not going to cut it

• Seeking to avoid potential early tariffs by the incoming Trump administration, the European Union has already begun (formally and informally) floating the possibility of concessions as tribute to the future White House – including:
  • An increase in purchases of US LNG.
  • An alignment on China policies (“The China demand was made clear during preliminary talks with Republican interlocutors ahead of the election”).
  • Potential increases in defense spending.
  • Potential collaboration over the issue of Ukraine.
  • Conceivable decreases in automobile tariffs.

• We do not expect these gestures to be sufficient for the EU to avoid suffering tariffs early in the Trump 2.0 administration, however; possibly as soon as ‘Day 1,’ and certainly by April at the latest – for the following reasons:
  • Most if not all of the EU’s mooted proposals are unrealistic, and the Trump administration is not likely to feel incentivized to ‘pretend’ to believe them.
  • We believe President Donald Trump and his trade team want to impose tariffs on the EU, both out of concern with its actions and out of opportunism to compete with it.
  • The existence of time-sensitive ‘triggers’ (such as the ends of moratoriums on digital tax- and steel-related tariffs) means the path of least resistance will be one of escalation: “That’s directly in response to something the EU has already done” (Source)