Trump’s Tariff Gambit: What’s Next for Europe?
On the latest episode of our Foreign Press Podcast, the Association of Foreign Press Correspondents (AFPC-USA) had Donald Trump on their minds—specifically the impact his tariffs will have on Europe. Trump’s return to office signals a potential transatlantic trade war, with tariffs of up to 20% on all U.S. imports. That has wide-ranging effects for Americans and Europeans alike.
So here’s the big question: How will Europe withstand the economic fallout? Can we expect political instability and slow growth to weaken the continent’s response? To learn more, we spoke with Keith M. Rockwell, a Senior Research Fellow at the Hinrich Foundation—a Singapore-based philanthropic organization that works to advance sustainable global trade—who previously served as the Director of Media Relations at the World Trade Organization (WTO).
In conversation with Alan Herrera, who oversees AFPC-USA’s editorial operations, he offers considerable insight, informed by his recent report detailing Europe’s “two-pronged approach” to dealing with the U.S. president, into how Trump’s second presidency, already running at a furious pace, will impact trade relationships with some of the U.S.’ most pivotal allies.
This episode of the Foreign Press Podcast was produced in partnership with the Hinrich Foundation. AFPC-USA is solely responsible for the content of this episode.
Alan Herrera: Hello and welcome to the Foreign Press Podcast! I'm Alan Herrera. This podcast is an educational program brought to you by the Association of Foreign Press Correspondents in the United States. That's AFPC-USA. This episode has been produced in partnership with the Hinrich Foundation. AFPC-USA is solely responsible for the content of this episode.
US President Donald Trump's return to office could mean a transatlantic trade war, and Europe is bracing for impact. With tariffs of up to 20% on all imports into the US, the EU faces a serious economic threat. European leaders say they’re better prepared this time, but political instability and economic slowdowns put them in a weaker position than before. While Trump previously focused his trade wars on Canada, Mexico, China, and the BRICS nations, EU officials and business leaders now feel they are firmly in his crosshairs. During his first term, Trump imposed 25% tariffs on European steel and 10% on aluminum. Now, he’s vowing to go even further, proposing blanket tariffs of 10% to 20% on all US imports. For export-reliant Europe, the stakes are high.
Will diplomacy prevail, or will we see retaliatory tariffs and a fractured global economy? Today, we’re joined by Keith Rockwell, Senior Research Fellow at the Hinrich Foundation and former WTO spokesperson, to break down this issue and offer insight into how the second Trump presidency will impact these vital transatlantic ties. Stay tuned.
Keith, it's such a pleasure to have you here with me. I look forward to an engaging talk about your latest round of research. This one focused on the trade relationship both within and outside of the European Union and all of that and how it's connected to the US and everything with Trump right now. So, thank you for being here. I appreciate it.
Keith Rockwell: Alan. It's great to be back with you. Thank you for having me and look forward to our conversation.
AH: Wonderful, wonderful. I'd like to start by, how do I put this? So, the newly inaugurated President of the United States, Donald Trump, is currently threatening countries with tariffs to, quite frankly, get them to do whatever he wants, right? So, he is putting countries, he's putting multiple countries in a position. We saw something just two days ago with Colombia, for example. Now in terms of the EU over the course, just my own research, reading your stuff, I found it very interesting that you mentioned, for instance, that the EU is very export-heavy, right? It's a very export-heavy environment. So, all of this spells a lot of trouble, and it's a very delicate balance.
Keith M. Rockwell
So, I'd love to know, Keith, what specific steps have European leaders taken to prepare for potential Trump 2.0 tariffs? And could you just tell us a little bit more, for the journalists, of course, who are listening to us, could you elaborate on this whole thing about carrots and sticks and how this might play out in transatlantic trade negotiations?
KR: Yes, I'd be very happy to. Let me start by putting it into a context. The US and the European Union have the most broad and deep economic relationship of any two trading partners in the world. You're talking about the EU exporting over US$700 billion to the US and the US about US$600 billion to Europe. There's a deficit with respect to goods of a little over US$100 billion. But on the other hand, the US has got a rather significant surplus when it comes to trade in services, now that President Trump doesn't take this on board too much. But as you know, more people are employed in the services sector than in the manufacturing center by a huge margin. And services are the kind of cornerstone of the US economy. Now, beyond that, you have massive foreign direct investment in each case over three and a half trillion dollars invested on either side by the two parties.
And this of course means millions of jobs. So, there's a very close relationship economically speaking. There are also, of course, historical links and very important strategic and military links. It's important to keep this into context because as worried as the Europeans are about a trade war, there is something that makes them much, much more worried, and that's the real war on their eastern border. The notion of Vladimir Putin and the Russians storming across Ukraine and knocking on the door of the EU, those fears that they harbor are real. Remember that the Baltic Republics, Lithuania, Latvia, Estonia, were part of the Soviet Union. They were basically annexed by the Soviet Union; I think it was in 1940. And they have memories of this. Poland, very deep fears about what might come next. And Poland, of course, is right on the border with Ukraine. So, all of this has created quite a lot of tension.
Now, beyond that, you're looking at an environment now which is quite tenuous. The economy in Europe is not good. The political situation is volatile. If you look for example, at the most important economy in Europe, Germany, they've essentially been in recession for two years, and they have had their concerns about immigration. There've been some violent attacks committed by immigrants, and this has given rise to extreme right-wing parties, including Alternative for Deutschland (AfD), Alternative for Germany, which is polling number two; there'll be an election, a federal election to determine the government next month. I think it's on the 23rd of February. And the AfD is poised to take a very big chunk of the vote. Now, you have a similar situation in France with Marine Le Pen and the Rally for the Republic or the National Rally, I think is what it's called in English.
AH: I think it’s the National Front?
KR: No, it’s changed its name. It was the National Front, I think it’s the Assemblée nationale. I think that’s what it is, never mind, it’s the National Rally. Positions haven't changed much. They're very much the same: anti-immigrant, skeptical of the EU. They are very down on green measures. These right-wing parties, whatever country they're in in Europe, share similar philosophies about this. And many of them have sympathy for Mr. Putin. Okay, so that's the backdrop. Now, against this, there is a dependency on the United States, certainly for security, but also for trade. And there's not a lot of alternatives right now because there's also many of the same worries that there are in the US about China, just overwhelming the entire manufacturing base is being held in Germany as well, and also in other countries in Europe. The German car industry, you see the model around which Germany, the German economy, and really all of Europe was based, was the combustion engine automobile and the way in which businesses worked.
Large manufacturing companies partnered with very big commercial banks, and they operated through bank loans. There is a fragmented financial system in Europe. They do not have the kinds of venture capital that you have in the US so you don't see startups, and we can get into that as well. So that's the situation. Now, what are they doing that we've seen before? There was in 2018 action taken by Donald Trump against imports of steel and aluminum. He slapped a 25% import duty on all steel coming into the US and a 10% on aluminum. Well, the EU responded almost immediately. Within a very short time, they had hammered US imports with almost US$5 billion worth of duties. They were on motorcycles, they were on Kentucky Bourbon, they were on motorboats, some agricultural products. And some of these industries have not yet bounced back from that. So you've got, I mean, this is something that they've done already. They know how to target key sectors, which are represented by key politicians, and they know how to squeeze those constituents until they squeal. So they have also developed something they call the Anti, it's kind of an awkward name, but it's called the Anti-Coercion Instrument. It sounds like something you might see in Marathon Man or something like that.
AH: Sounds like it, yes.
KR: But what it is, is a streamlined way of being able to respond to what they believe is aggressive commercial action. It was originally designed with the Chinese in mind, but also with Donald Trump in mind. Now. The EU is probably the most multilaterally focused big economic player in the world today. And their go-to system for resolving disputes had been the dispute settlement system of the World Trade Organization. But now that that dispute settlement system has been essentially neutered because in Trump 1 the jurists for the appellate body were, the reappointment was blocked, meaning that you no longer can appeal because there's not any jurist serving in the appellate body. And because of the way the agreement is written, all countries have the right to appeal; those people who may lose the case, the dispute settlement case at the first stage have the right to appeal, and they can simply appeal into the void and the case becomes paralyzed. So, they saw that this was not going to be fixed anytime soon. And by the way, the Biden administration left things as they were, a lot of the trade tension stoked by Donald Trump. The Biden administration did nothing to alleviate them. Well, I shouldn't say “nothing,” but they did little.
And that brings me to the first flashpoint that's coming up. When the Trump administration slapped these duties on EU exports of steel and aluminum, and the EU responded, the Biden administration came in and cut a deal with the EU. They lifted the tariffs. They kept in place, there was a quota. If the EU export exceeded the quota of whatever it was, a million tons, they would pay a duty over that quota. And EU exporters are paying about US$300 million a year in out of quota duties as it's called, without getting too technical. But other than that, the tariffs were largely lifted. What they tried to do was broker a broader steel agreement based on a lot of the things the Biden administration did. They wanted it to be based on everything. They wanted it to be green steel and pro-market steel. They wanted to keep China out while promoting clean technologies.
They wanted to do all of these things. And what happened was the EU said, "Okay, fine, but here's the problem. We have our own way of dealing with carbon emissions. It's called the Carbon Border Adjustment Mechanism." Without getting too much into that, it's a tax that they will begin applying next year to imports of certain products, including steel, aluminum, chemicals, hydrogen polluting products, and they will levy the duty on those products based on the carbon footprint that their production process leaves.
Are you following me on this? It's a little tricky, but all of this is relevant because in the US, they don't have any interest at all in a carbon pricing system. I think there's some, well, in some states they do. California and Washington and some eastern states, they do. They see this as a way to address negative externalities. They're called the process of polluting and make the polluter pay for what they have done in terms of spoiling the environment. Well, the US said no. So, they said, "Why don't you just do this? Why don't we just keep Chinese steel out of your market?" And the EU said, "But that's a violation of WTO rules." And the Biden administration didn't really care. So, there's a truce in place. It will expire at the end of March. And what happens then will be very, very interesting.
Like I said, the EU has this Anti-Coercion Instrument, and they've already put together their hit list. It's one of the most closely guarded secrets in Brussels, but there's a lengthy list of US products that will get hit with duties the second the US slaps tariffs on the EU, which may explain why it is that the US has not specifically pointed. They have in the past, the president has said things about the EU, but they haven't, sort of in a more formal way, said they're targeting the EU in the way they have, for example, for Canada, Mexico, and China. And perhaps it's because the EU has been preparing this. Some journalists call it the trade bazooka. The EU officials don't like that, but it's a blunt instrument to respond right away and then negotiate an outcome while both sides have got products that are facing swingeing duties.
So, keep an eye on that. Keep an eye on this CBAM thing, this border tax, which will be applied as an environmental measure, and keep an eye on another thing, which is the EU's regulatory might when it comes to tech. The US has no federal regulations to speak of with respect to big tech. They don't have federal data privacy. They don't have any kind of serious markets concentration when it comes to platforms. When Lena Khan was at the Federal Trade Commission, she began to target this, but there's no congressionally mandated pathway for dealing with regulating big tech. California has its own laws, and they tend to be the ones that are followed, but it's not like the EU. And so, you've got this bloc of 27 countries which has a great deal of regulatory clout. Many people say, including many Europeans say, maybe they are overregulated.
But you can see how at a time when you've got a president who wants to cut regulations, cut taxes, scrap environmental measures, there will be tensions. Now, remember what I said in the beginning, the EU is completely dependent on the US to defend its borders. President Trump has said, and he's absolutely right about this, that for too long, the Europeans have not paid their fair share for defense. Spain, for example, pays 1.28% of its GDP for trade, which is below the NATO target of 2%. Belgium, I think about 1.8%, something like this. They're meant to be at 2%. Trump is now calling for 5%. Yeah, we'll talk about going up to 3[%]. And many of, I think about two-thirds of the NATO countries have now reached the 2%, and some are going beyond that. The Baltics that I mentioned, Poland, they're far beyond that.
And what you've seen with Trump is this notion that you can flamboyantly wield this trade saber about things that have nothing to do with trade. Like we saw with Colombia a couple of days ago, and we've seen it with Denmark for goodness sakes, because the president would like for the US to somehow obtain Greenland. And the Danes are saying, wait, wait a second. [Greenland] is a Danish possession, and it's a self-governing island for the Greenlanders. But there are apparently minerals there, and there are strategic considerations as well, particularly as the Arctic ice begins to melt and ships can go through the Arctic Ocean more smoothly. This is a very long response to your question, Alan, for which I apologize. You said, what will they do? Now? I mentioned the Anti-Coercion Instrument because they do have this in their back pocket. That's not what they want to do at all.
They want to do a deal. And they did a deal back in 2019, the Commission president then, the Luxembourgeois Jean-Claude Juncker, went to Washington and said, "We'll, buy more liquified natural gas. We'll buy more soybeans. What do you think?" And the president said, "Okay." And they can still do that. US shipments of LNG have gone soaring. They are now the biggest provider of this. But there is scope to provide more, particularly if the Russians are elbowed out of that market, they can no longer deliver by tanker oil or by pipeline, but they can still deliver LNG to the European market. Now, that's one thing. Another thing, you could get European companies investing in plants and equipment in the US. They like the fact that energy is anywhere from a third to a fifth of the price in the US that it is in Europe.
They like a less regulated environment. There are still going to be some benefits from the Inflation Reduction Act that would be available to companies that invest there. So, I mean, these things, buying more LNG, buying more soybeans, investing more in the US market, these are things that they might want to do anyway. In fact, the indications are that they would, so military equipment, buy more military equipment, that's another thing that they could do. And all of those things are not by any means outside the realm of possibility. So, the question is, will this be a deal? And the president is to his core, a deal maker.
AH: The art of the deal.
KR: There you go. And he's got a deal. Will he accept that? I mean, they haven't really started talking about it yet. He's been more focused on other things. But I think Ursula von der Leyen, the Commission president, is going over there soon. Let's see. Let's see what happens. But those are sort of the outlines of the way this thing is evolving and what you might see in the—and it's going to happen soon. That's going to be a couple of months.
AH: Yeah, I mean, it's interesting right now just getting some insight into, well, one, the role that European investments in US-based production facilities, the role that would play in, the word would be, well, alleviating tariff threats. But it sounds to me, I thought what you mentioned just now is very interesting.
You mentioned how essentially Trump is leading the charge, so to speak, in taking things that are not trade related and using them as a bludgeon to impact trade, to affect trade. And it's interesting to see all of this happening against the backdrop of his talk, shall we say, of territorial expansion. Now amid all of that, right? I guess, just a random question that comes to mind. So, the EU is currently going through it, for lack of a better term, but I'm wondering if the EU's internal political instability undermines its ability to present a unified front in trade negotiations with the US. And I suppose another thing that comes to mind is—you've given some insights—but are there any lessons from Trump's first term that the EU can leverage to better handle his trade policies this time around? It'll just be interesting to get a picture given, of course, all of these crazy factors that are impacting discussions and that will continue to impact them.
KR: Well, the answer to your first question, are there divisions in the EU that make it difficult to negotiate? Very much so. Trump has his very strong supporters inside the EU, not least Viktor Orban, the boss of Hungary.
AH: A big one, yes.
KR: He is, and he is a very pro-Trump guy. But there are others, including within the political parties. I mean, Nigel Farage, who heads the Reform Party in the UK, is a big Trump fan. And Trump likes him. I mean, Trump was saying that he should be the ambassador, but he's running this party, which is an interesting thing because although they only have, I think, five seats in the House of Commons, they got 14% of the vote. And one of the things they're pushing for in the UK is election reform so there's more proportional representation, which would of course give them a bigger share of the members of Parliament.
He has his supporters, a lot of the same political vibes that are going through the US. You have them over here too in every country, whether it's pushback against green initiatives or anti-immigration or your feelings about Putin, these are very, very much to the fore here like they are in the US. And it creates divisions across the EU and within member countries. I mean, the German campaign has been quite fierce. And what's going to happen, I don't know. But the way things are looking right now, there's going to be a serious realignment. And even the socialists are starting to say, we need to crack down on immigration and on crime. It may be that the overall crime figures are low, but when you have a widely publicized, horrific attack like they've had in Germany, people get very nervous, and they want the government to protect them and to respond.
And so that's one of the things that's happening. And unfortunately, this can give rise to extreme elements. And we're seeing that in Germany, but elsewhere too, to the extent that they're talking about not just immigration outside the EU, but even internal EU immigration and internal EU trade.
AH: How do I put this? It’s fascinating, right, because what we’re seeing is some ripple effect, I suppose we can call it, that’s crossing borders. It's absolutely crossing borders. And all of this is juxtaposed against the fact that, and we touched upon this in a past conversation that we had about the rise of far-right parties, but we see these authoritarian regimes that are just continuing to gain power. And given the impact that that's having on the social fabric, the social fabric of Europe, it'd be interesting to know how a trade war, if they engage in a tit for tat trade war, that's the term that comes to mind right now, how might this trade war between the US and Europe impact developing economies or the nations in BRICS, for instance?
KR: Well, that's a very good question. What's important to keep in mind is that the EU is big, and if they get hit by the US, they will hit back, and it will hurt. Like I said, the Harley Davidsons and the Maker's Marks of the world, they don't want to see a repeat of what happened seven years ago.
AH: Not at all.
KR: With respect to other parts of the world. Well, here's one of the things that's happening is as people are looking at the US taking on a much more protectionist and isolationist position, they're looking elsewhere. As the EU has just done a deal with MERCOSUR, it still has to be approved by the French. And I think maybe the Italians, I can't remember, or maybe it's Irish. The Irish have a problem with beef, but the fact that it looks as though their biggest trading partner is now not reliable, this could spur people to move. The EU have also intensified their negotiations with Malaysia. They've done a deal with Mexico, they're working with, even with India, to try and get a broader, deeper economic relationship, an agreement that would buttress this emerging relationship. Now, are you going to be able to turn things around overnight with all of these historical and cultural links that the US and the Europeans have?
It'll be very hard to do, but the EU are looking wherever they can to find opportunities. And if the US is going to abandon the playing field, well, the Europeans can move right in. But the Europeans, the Gulf States are also very interested in working with the EU, but the EU have to get their internal act together. There was a report by the former European Central Bank Chief Mario Draghi. He was the Prime Minister of Italy as well, in which he analyzed the European economy. Why is the European economy so much less dynamic than that of China or the United States? And we talked about this a little bit before. The structure of the economy is outdated, and it's not supple, it's not nimble.
You get some really bright kid in Milano or in Frankfurt or in Amsterdam who in his garage or in the back shed comes up with some fantastic new breakthrough. Where does he go? It's hard to get access to finance. And then if the company starts to take off, once it gets to be big, regulation pins it down. They're trying to address this. I saw a statistic yesterday or two days ago, which said they want to cut paperwork, the amount of time it takes to do paperwork by over a third for smaller companies and by about a quarter for bigger companies. And Madame von der Leyen has made clear she wants to move on this, but they need to do a couple of things. They need to pare back the red tape. This is not to say that all regulation is bad. Again, this is something that in the United States, we have an argument about [whether to] regulate or not regulate. Well, what about smart regulating? Not all regulations are good, but by the same token, to have a totally unregulated environment is dangerous.
So going through and finding that, the other thing they have to do is that the common market right now, the single market that was built over the course of decades in the beginning part of this century and the century before, has not been completed. And where it is continuing to be fragmented are two critical areas, finance and energy, which in this day and age are, for example, for the tech industry, the lifeblood of these companies. And in the EU, there's only, of the top 50 tech companies in the world, only four are European. And Mr. Draghi's report says that 800 billion euros are needed to turbocharge the EU economy to move forward. Now, will they agree with this? There's a lot of disagreement about whether they go green, and a lot of the regulations that are required for environmental reasons are onerous, meaning you have to say that. So how do they hit the sweet spot? How do they retain necessary environmental regulations, necessary safety regulations without overly burdening, particularly smaller entrepreneurs that are really the lifeblood of any economy? And if they can't do that, they're going to continue to lag behind, and they're going to be, right now, this is important: Europe is in a much weaker position dealing with Donald Trump than it was in 2018.
AH: Absolutely, yes, I would agree with that. Again, this goes back to, well, again, we've spoken about the ongoing Ukraine war and all these other little factors, but especially going back to our prior conversation just about the rise of these far-right parties and extremist politics, Trump has successfully allowed those same politics to take hold of the American electorate.
And that is happening. It has happened and continues to happen. It's happening on the other side of the pond. And I guess speaking as a journalist, right, speaking as a member of the media, we've already seen the impact of misinformation and disinformation and how that impacted the American electorate. And I see, based on everything that you're saying, right, I see no reason why—and I mean, in truth, we have seen this already—but I see no reason why it wouldn't continue. I should say that there will be more misinformation and disinformation to suit certain aims in regard to this trade war. Not to say that Europe isn't suffering in multiple ways that are impacting this trade relationship or weakening it, but it'll be interesting to see just how the conversation will continue to evolve when people just can't agree on the same facts.
KR: Yeah, well, I agree with you. I mean, I'm going to sound like the old fogey that I am by saying this, but I mean, social media has a lot to do with this. And the problem, I mean, social media is fine in so far as it's a way to get information out. But the problem with it that I see is that everyone has their own channel, and everyone gets into their own echo chamber where they repeat the same views and prejudices that they have heard. And this just reinforces what they're saying. You don't have a cross fertilization of ideas and arguments and discussions. And this happens, in the United States, it's happening. It happens at universities. You can't have arguments in many classrooms because you'll be ostracized.
And I said, gee wiz, when I was in college back in the Paleozoic era, a lot of the things I learned, the most important things I learned were arguing with my pals in the pub about whatever it was. In those days, we argued about everything, but we had a very different world in the late seventies. But that kind of exchange of views, and every once in a while when you do this, you'll hear somebody who has a different view say something, and you'll say, I never thought of that. Actually, maybe he's right. Maybe he has a point. And unless you can start to have conversations like that where you can sit down, and it doesn't matter if you have different points of view, if you can't exchange these views in a respectful way over a beer or a coffee or whatever it is—
AH: In a healthy environment of some kind.
KR: Yeah! Well, you’re not going to see what the other person is thinking and feeling. And I think there's just a total lack of empathy. And it's here too and there, and people are afraid. And you see this a lot in the whole immigration question. And if you can stoke this with misinformation, you get people, very good, decent people become afraid. And when that happens, people are ripe for manipulation.
AH: So then naturally, this term, right, “fertilization.” Instead of fostering an environment that's based on healthy discourse, we end up with this. We end up in a situation where, as we see right now, this back and forth between the EU and with Trump, and also what happened with Colombia a couple of days ago, it feels like a saga that plays out in the newspapers.
And yet, and I'm sure you would agree, because you, of course, you're the expert, and we delve a little deeper into these issues. But the newspapers themselves, and this is of course a problem across all media: They’re not necessarily, the overwhelming majority are not necessarily getting into the nitty gritty of the matter and how this can just be really bad for the average consumer around the world.
KR: Oh, yeah.
AH: I'd love to hear your response to that. But I mean, it brings to mind something that you mentioned over the course of your research. You mentioned how of course he's a deal maker, Trump is a deal maker. But how do you interpret, again, this is something that comes to mind right now, how do you interpret his past actions and trade policy? I think a term that you used was how his bark can be worse than his bite, right? So, would you say that his bark truly does outweigh his bite?
KR: Well, he's also shown that he has no hesitation about slapping tariffs on products. Something like US$350 billion worth of Chinese exports were hit, and those tariffs are still in place. In fact, Biden added to the total, he didn't remove any of them. And the tariffs on steel and aluminum, like I say, they never got a deal with the Biden administration. Brussels and Washington never really reached a deal. They had a truce, but not a deal.
AH: Which I found surprising.
KR: Which, yeah, you’d be surprised how much tension there was with the Biden administration. And I mean, what you had, the Biden administration was just anti-trade. US trade as a share of US GDP is declining. It's a little under a quarter of the GDP right now. But interestingly, this will turn around eventually. It may be a couple of decades, but you get AOC [Representative Alexandria Ocasio-Cortez] saying, a pro trade thing about Colombia: “This is going to make your cup of coffee and your flowers for your Valentine more expensive.” Which of course is completely true.
AH: Yeah, exactly. I did see.
KR: But people, for whatever reason, don't want to believe that. But there, having her say this, I said, "Way to go get that point across." I'm not sure that her constituency is necessarily a pro trade constituency, but when you see, I mean, things like coffee and flowers are things that people can relate to. Well, the price of eggs doomed the Democrats in the last election, didn't it?
AH: It did, and I say that as someone who saw US$13 eggs the other day.
KR: Really?
AH: Yes.
KR: I live in Switzerland, so everything seems exorbitantly priced.
AH: I remember from my time in Switzerland, yes.
KR: But it's a beautiful place. It's a great country. A lot of things about it I really like, but it's not for the fiscally faint of heart.
AH: No, no. And I mean, you're right though, that your point about eggs and grocery prices, how this impacted the last election, but all of that, right? It's interconnected, right? I mean, that's the general theme here, right? It's all interconnected to this larger trade issue. None of this from what we see, from what has happened just in the last week, and what will continue to happen, because I mean, even now we're talking, and yet this whole thing is developing as we speak. It's just going to keep happening. But none of this, based on just your expertise and from what I read, is actually going to bring the price of groceries down. It's going to just contribute to a more disenchanted and frustrated American electorate. And it'll be interesting to see how this does or doesn't impact Trump over the coming months and over the coming years. It's the kind of thing where, well, you could say that it's incumbent on the subject of the EU, it's incumbent that they bolster their—what's the word here?—their economic and political unity to better withstand external pressures like these US tariffs.
KR: But if you look at the difficulties we have in the states between various states and how they disagree, imagine if they were all different countries you have in the EU.
AH: Certainly, feels like they’re different countries.
KR: The big difference is sometimes it does seem like that. Yes, that's true. The difference though is that over here, you've had wars that killed tens of millions of people and people, the whole reason we have the European Union is so that France and Germany wouldn't go to war every 30 years. After having had four of those wars over the period of, I don't know, a century, they said, “We have to stop this. We can't do this.” And they did. And they did. And on that level, it's been a tremendous success. But the problem is, of course, it involves surrendering a bit of sovereignty, and it involves a collective mission. And that means you need to compromise. It means you need to sacrifice for the common good. And that's a concept that is not widely embraced these days.
AH: I was about to say, yeah, essentially there's this juxtaposition. You have one man who is really ushering in, I guess, this isolationist era of just general US policy, and you see how that's impacting trade, and its very protectionist. But I suppose what you mentioned just now about a collective, I see how there's this very individualistic mindset versus this collective mindset. And from my vantage point, I see that if we go back to World War II, for example, Europe is leveled.
The US comes out ahead. We have things like the Marshall Plan, and then the US becomes the manufacturing capital. And as a result, and this of course leads into the American dream, and all of the other issues that we've had since then, people are, again, very disenchanted. We have this situation where essentially American people do not know that struggle. They do not know what it's like to have so much war and death on your soil, and they don't know how, again, a framework like the EU would need to exist or why this regulatory framework, this wider regulatory framework, has developed in response to these struggles. And it sounds like, especially where Trump is concerned, that this is just taken for granted on the American side. So it'll be interesting to see how we… well, again, just more friction. More friction.
KR: And sadly, there's a tendency on the part of too many politicians today, whether the issue is immigration or whether it's trade, or whether it's crime or whether it's geopolitics. The tendency is to blame foreigners for whatever the problems are, which of course is very easy because these are all very difficult problems that require a collective endeavor and require people to sit around and try and find an outcome that is satisfactory to everybody. And that takes hard work.
AH: It does. Scapegoating is easier.
KR: Yeah, scapegoating, yeah. And these people don't vote in elections. So hey, they may not like it, but they're not going to punish you at the ballot box. So it's a worrisome thing. As a foreigner in another country, I'm very much aware of what it is to be an immigrant. Obviously, it's a very easy situation for me. But still, you realize that thanks to policies that are welcoming, you have a chance to contribute. And that's something that many people accept and support. But I'm not sure that that's filtering through to the wider population.
AH: It doesn't seem to be the case, because if it did, well, I suppose you could say that society would, in a larger sense, would feel like something that would be easier to navigate. We exist in this culture of confusion. People are confused and they're seeking much easier answers than actually exist. And then we end up with this current issue with trade.
KR: And you know what? It's the same issue. If you look at all of the other things, whether it's immigration or whether it's crime or whether it's geopolitics, trade, it's blaming external forces.
AH: It’s easiest, yeah.
KR: Instead of saying, “Hey, the education system, the healthcare system, the immigration system, right on down the list, these things need to be fixed.” But it's not like people haven't given that a shot for decades. These have been problems, and people are not finding solutions. So, blame it on the foreigners.
AH: And unfortunately, again, it leads to the cultivation of this environment that in the end isn’t exactly going to help costs go down.
KR: No.
AH: No. It’s going to just inflame hostilities, and to have this happening again against this backdrop of Trump's desire for territorial expansion, it is very scary because it's not like Panama, for example, it's not like Panama doesn't have relationships with the EU. That’s just one example. But I find it interesting how the Panama Canal right now is this, well, he sees it as a bargaining chip, I suppose, something that he can just take. And that's not me inserting my opinion. This is just general, it's a fact from the things that he has said and the things that his administration members, his administration have said, but none of this exists in a vacuum.
KR: No.
AH: It doesn’t, and I don’t see any way that we can move forward, certainly from my point of view, and certainly after reading your research, I don't see how we can move forward when we have so many multifaceted threats coming at this point.
KR: I agree, and I think this is an opportunity for opposition parties to think very clearly about how they want to approach the future and to try and go about things in a constructive way. I mean, that sounds so simple, but it seems, it’s boring. A lot of this stuff is just, it's hard work and putting your heads together and thinking the problem through instead of just lashing out. But hey, what do I know?
AH: I think a fair amount otherwise we wouldn’t be here.
KR: Thank you for saying that but I mean, it does. You look around and you just say, for example, on the Denmark thing and Greenland, I mean the deal is there to be had. I mean, if what Donald Trump wants is enhanced access to the rare earths and other critical raw materials, he can get that. If he wants another military base there, a bigger military base, he can probably get that too. I mean I don't think… if that's what he wants and is he starting out with an absolutist position whereby he will then say, “Okay, I came out of this with a new naval base or a new Air Force base, plus enhanced access to whatever the minerals are that they want to extract from Greenland.” He can probably do that. And you know what? I don't think there'd be any pushback at all from either the Greenlanders or from the Danes. But is that what he wants? Or is this a question of manifest destiny?
AH: There's the word. Yeah, here's the word. And of course, it's fascinating, but it is also frightening to consider because at the end of the day, we're talking about people's lives being at stake in addition to their livelihoods, right? Of course. But above all their lives. There appears to be, and this is just the general trends that I've seen in your research overall, but there just is, and I think that this is a theme here, just a lack of appreciation for why the system is the way it is and why we're able to even have these transatlantic trade relationships or why there's even some kind of cooperation. So, it'll be interesting.
KR: Like I say, it’s the multilateral system, whether it’s the WTO or UN, World Bank, the IMF, the WHO, all of these organizations are in trouble because the chief benefactor of those organizations has traditionally been the United States, and the US has concerns about these organizations. And you know what? These are not thoroughly illegitimate concerns, but the question is, do you want to fix it or do you want to jettison it? And we've seen over the decades that working together through multilateral rules, whether it's the EU or the WHO or the WTO, has had benefits. Have there been drawbacks as well? You bet. You bet. Fix 'em. That's hard to do.
AH: Remarkably so. I think that this is a great note to end on. You've certainly given me a lot to think about. I really, I thank you for this very educational and insightful back and forth, and I hope that whoever is listening to us today, especially the foreign journalists that my organization represents, I hope that they take this to heart, and I hope that this will help them improve their reporting. So, thank you, Keith. I really value your expertise.
KR: Alan, it's been a real pleasure. Thank you for taking the time to talk with me.
