When Emmanuel Macron welcomes Donald Trump to the Group of Seven summit in France, he’s sure to deploy one of his vice-like handshakes. But as he tightens his grip, loosening Europe’s dependence on the U.S. will be on Macron’s mind.
During his two-and-a-half years in the White House, Trump has treated his European allies like foes, ignoring their pleas on climate change, imposing trade tariffs and threatening to penalize European Union attempts to get around Iran sanctions. That combative approach may end up shaping Trump’s legacy in Europe, second term or not.
As he cranks up his campaign for re-election in 2020, much of Europe isn’t waiting for the outcome: Berated and belittled, governments are waking up to just how reliant they’ve become on the U.S. in the post-World War II period. Some see that as a cause for action. It’s certainly a recipe for tensions at the G-7 in Biarritz.
The most egregious threat that could turn Europe away from the U.S. is Trump’s consideration of tariffs on European car imports on national security grounds—his administration has postponed a final decision to November while talks on a limited EU-U.S. trade deal continue. The value of vehicles sent to the U.S. has held steady at around $50 billion for several years, but its share of exports has fallen to the lowest level since 2009. Meanwhile, China’s share has risen considerably.
Looking at the big German automakers, China has already supplanted the U.S. as the largest foreign market for each, most recently for Mercedes-owner Daimler in 2017. It’s not all one way: China’s state-backed Beijing Automotive Group said in July it was buying a 5% stake in Daimler, a year after Zhejiang Geely Holding Group took a near 10% stake, becoming the luxury carmaker’s single largest shareholder.
As the U.S. wrestles with China on trade and technology, Europe is trying not to pick sides. Germany’s government is among those not heeding U.S. calls to abandon Huawei Technologies Co. on security grounds. Silicon Valley remains the capital of tech innovation—accounting for U.S. threats to France over moves to tax technology giants like Facebook and Amazon—and East Asia produces most of the world’s electronics. But Europe has invested heavily to grow its own tech sector, and since last year it is officially more reliant on Chinese imports and exports than on the U.S.
One of Trump’s regular gripes with European allies, in particular Germany, is over low defense outlays that mean the U.S. bears the burden of protecting the continent. He’s questioned the worth of NATO, the bedrock of the trans-Atlantic military alliance; pulled out of a nuclear treaty with Russia without consulting allies in Europe; and mulled charging countries for the privilege of hosting U.S. troops on their soil.
In all, the U.S. has 246 bases throughout Europe, or nearly half of its foreign total, and more than 64,000 troops, second only to Asia. While any defense talk at the G-7 may pit Trump against his German and French counterparts, it’s an area where U.K. Prime Minister Boris Johnson—“Britain Trump,” as the president called him—is likely to split with Europe and side with America. After all, he needs a U.K.-U.S. trade deal.
Trump has accused Germany of being “captive to Russia” over the Nord Stream 2 gas pipeline due to open at the end of 2019, and the U.S. administration has warned of sanctioning the venture. When it comes to keeping the power on, Europe’s five largest economies collectively had net imports of mineral fuels and oils of more than $150 billion in each of the last 14 years. In 2018, they imported $18.4 billion from the U.S., or a 5% share, an all-time record. And though Russia’s share is far greater, the countries’ reliance on their eastern neighbor has waned. This gives the U.S. growing leverage in a key area of trade, and may even help Trump sell more LNG to Europe.
The chief sticking point when it comes to U.S.-EU trade negotiations is Trump’s demand that Europe open up its closely-protected agricultural sector. So far, the EU insists agriculture is off the table. But the U.S. may have real leverage, considering it’s increased its share of Europe’s agricultural exports in each of the last five years, spending more than $79 billion. That could expose a European rift, since Germany, which sends just 2.7% of its food and beverage exports to the U.S., is open to discussing agriculture while the far more U.S.-reliant France is implacably opposed. Trump’s U.S. envoy to Berlin highlighted that uncomfortable reality in July, telling Germans they should “work to ensure, however they can,” that agriculture is included.
Europe has weighed efforts to wriggle free from U.S. dominance for years, with little success. But those efforts are more serious in the face of Trump’s repeated jabs. The outgoing European Commission, the EU’s executive, set up a mechanism to find ways to trade with Iran in defiance of the U.S., and has initiated plans to boost the role of the euro in a world still dominated by the dollar. As in other policy areas, Europe is by no means united: Italy and the U.K. are more likely to try and boost ties with the U.S. than weaken them. It’s going to make for a lively summit in Biarritz.