The implications of a Joe Biden victory versus a second term for Donald Trump on the US-EU relationship will become clearer after this week. In its September report, UBS stated: “Most national elections are not global events, but the US election is one exception.”
“The less multilateral approach adopted by the US to tackling the world’s problems, from trade to geopolitics, has left Europe somewhat isolated,” UBS said. “Whatever path the US decides to take in the future will likely have important ramifications for US-Europe relations and their respective economic progress.”
The world’s largest wealth manager noted that the US election will have an effect on eurozone trade, since the US is the euro area’s single most important trading partner and accounts for 14% of all its exports.
Trump has repeatedly threatened to set punitive tariffs on European car exports, something deeply concerning especially for Germany’s powerful automotive sector. In 2018, he slapped duties of 25% on steel imports and 10% on aluminium.
If Trump were to win, “US-EU trade tensions will likely remain, but increased tariffs are unlikely in the near term,” UBS says, and he “is likely to keep pressure on the EU to support NATO” and be “less willing to work with Europe to engage with China.” Ultimately, it could lead to “increased fragmentation in global trade” the bank said.
If Biden wins, UBS believes it could lead to the easing of trade tensions, with steel tariffs potentially being overturned and threats towards the EU auto industry dwindling.
“However, the positive economic benefit of this [a Biden win] would be marginal, in our view,” UBS said. “Swift progress toward a US-EU trade deal appears unlikely.”
Donald Trump has fostered a confrontational relationship with many EU countries since his victory in 2016, with much of his aggression focussed upon Germany and its chancellor Angela Merkel, criticising her decisions to accept refugees fleeing the Syrian war, and Germany’s insufficient NATO contributions. Many German politicians have been vocal about the fact that under Trump, the transatlantic relationship has deteriated.
Another Trump victory could see more protectionism which would seriously harm EU companies — the European Union ran a €153bn surplus with the US in 2019.
Biden is the more appealing candidate for European companies. He (Biden) said that he would sign the US up to the Paris Climate Agreement again, after Trump withdrew from it in 2019. He has also indicated he would reverse Trump’s move to cut US funding to the World Health Organisation, stating in June this year that “it is essential to coordinating the global response during a pandemic, and the United States should be leading that response as we had in the past.”
But even if the Democratic candidate were to win, the transatlantic relationship may never be what it once was. "Everyone who thinks everything in the transatlantic partnership will be as it once was with a Democratic president underestimates the structural changes,” German foreign minister Heiko Maas told the German Press Agency in the Summer.
Hans Kundnani, a senior research fellow in the Europe Programme at Chatham House, likewise argues that the relationship between the US and Europe was faulty even before Trump came along. “The tendency among Atlanticists to idealise US policy towards Europe before Trump entered the White House obscures the pressures on the transatlantic relationship that were already evident prior to his run for the presidency in 2016,” Kundnani says in his analysis.
He suggests that the US’s increasing focus on China has meant European nations have come under pressure to take more responsibility for their own security. Kundnani says that even if Trump gets re-elected, “Europeans are unlikely to achieve ‘strategic autonomy’ but could in fact be more splintered, with France and like-minded member states pushing to create defence initiatives within the EU “while others such as Poland look to further bilateralise their security relationship with the US.”
Of course a victory for Europe may not play so well with No. 10, the Democrats have already said they will not look kindly upon a UK-US deal that negatively impacts the Good Friday Agreement. Biden stated that he wouldn’t allow peace in Northern Ireland to become a “casualty of Brexit”. Ultimately if there is a win for the EU, that doesn’t mean there will be a win for the UK. If the EU prevails after this election, it is safe to assume they will not be sharing their good fortune with the UK. Then again, that also goes both ways.
Whatever the outcome, a ‘new world’ will be upon us this week. Good luck America.
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