With Donald Trump’s recent election win, European leaders are grappling with the potential for renewed tariffs on EU exports to the United States. Throughout his campaign, Trump proposed a blanket 10% to 20% tariff on all U.S. imports and a steep increase in tariffs on Chinese goods, which many fear could revive trade tensions and disrupt transatlantic relations. Here’s how Europe might respond to Trump’s tariff policies:

1. Targeted Concessions on U.S. Imports

To avoid or mitigate tariffs, Europe could make concessions to increase imports from the U.S. This approach might involve expanding European purchases of liquefied natural gas (LNG) and agricultural products, such as soybeans, which were part of a trade agreement between Trump and the EU in 2018. Analysts, including Capital Economics’ Andrew Kenningham, suggest that the EU’s President Ursula von der Leyen may seek to strengthen partnerships in these areas, offering tangible benefits to U.S. sectors like agriculture and energy. Additionally, the EU might also work with the U.S. on the EU-US Trade and Technology Council’s digital collaboration initiatives, further promoting common goals.

2. Geopolitical and Defense Agreements

Another possibility is that Europe and the U.S. could reach a broader geopolitical agreement, particularly in defense. The EU could potentially agree to increase its defense-related imports from the U.S. in return for tariff relief, bolstering both countries’ support for Ukraine. However, with economic strain and political division within the EU, a consensus on such a spending increase may be difficult, especially with resistance to further joint borrowing.

3. Strengthened Stance Against China

A third potential path for Europe involves aligning more closely with the U.S. on trade policies regarding China. The EU could consider stricter controls on Chinese tech imports, such as electric vehicles and other high-tech products, mirroring the U.S.’s increasingly protective stance. While the EU has tried to maintain a balanced approach with China, Trump’s renewed focus on trade conflicts might push Europe toward a tougher stance, especially on high-stakes technology like advanced chips.

This realignment with the U.S. may face pushback within the EU, especially from German leadership, as Chancellor Olaf Scholz has been cautious about fully adopting the EU’s recent “de-risking” strategy aimed at minimizing dependency on Chinese supply chains.

Preparing for Economic Uncertainty

Despite Europe’s potential strategies, its response is complicated by internal political and economic challenges. The EU lacks the strong, united leadership it had in Trump’s first term, with significant shifts in Germany and France, adding a layer of unpredictability. While some analysts, such as ING’s Carsten Brzeski, express doubts about Europe’s ability to respond decisively, others believe that economic pragmatism may ultimately drive Europe to seek compromise solutions.

With the Trump administration’s tariff policy likely to affect Europe’s export-heavy industries, these strategies highlight the EU’s options to preserve stability in its trade relationship with the U.S. in the face of uncertain economic terrain.