Trump’s Transactional Realpolitik Alienates America’s European Allies

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If U.S. President Donald Trump has a governing philosophy, it’s “America First.” His unconventional approach to politics lies in envisioning himself as a businessman and self-proclaimed dealmaker who sees international relations from a transactional perspective.

Directed by Trump’s worldview, the U.S. has entered an isolationist period. The president has pulled back from major international agreements, such as the Paris agreement to mitigate climate change; the Trans-Pacific Partnership (TPP) that would have created an economic check on China’s influence in the Asia-Pacific region; and the Iran nuclear deal that was to reintegrate Iran into the international community. In addition, NAFTA is now under the slog of renegotiation between the U.S., Canada and Mexico, while a potential onslaught of U.S. tariffs has alarmed countries from China to Brazil to Germany.

This retrenchment has been felt perhaps most acutely in Europe, where Trump is taking a wrecking-ball approach to the post-World War II order that the U.S. and Europe built, turning longtime friends into frenemies.

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G7 Becomes G6+1

At the G7 Summit in Canada last month, Trump made his feelings for America’s traditional allies and neighbors painfully clear. He lashed out at the European Union and Canada for ripping off the U.S. on trade and freeloading on security.

“We’re like the piggy bank that everybody is robbing and that ends,” Trump said at the summit, where he refused to sign a joint communiqué and skipped out of the meeting early to fly to Singapore for his tête-à-tête with North Korea’s Kim Jong-un, a signal of where his priorities lie.

Above all, the president stuck to his guns on trade, promising tariffs that could further widen the transatlantic rift.

After an initial reprieve, Trump announced in May that he would impose a 25 percent duty on steel and a 10 percent duty on aluminum imports from the EU, Canada and Mexico. The EU called Trump’s move “illegal” and countered with tariffs of its own targeting U.S. exports of jeans, motorbikes and bourbon, symbols of American culture that strike deep into the heart of Republican territory.

“I think the tariffs will be imposed and remain in place for a long time,” wrote Edward Alden, a senior fellow at the Council on Foreign Relations, in an email. “I see neither the EU nor U.S. eager to negotiate. The real question is whether Trump escalates further with auto tariffs or other measures.”

Trump wants to impose tariffs of up to 25 percent on foreign cars, which would hit German luxury cars the hardest and substantially ratchet up trade tensions. Angela Merkel, the usually restrained German chancellor, threatened retaliatory tariffs and declared, “We won’t let ourselves be ripped off again and again.”

Canadian Prime Minister Justin Trudeau was equally combative, warning that “Canadians, we’re polite, we’re reasonable, but we also will not be pushed around” — to which Trump tweeted that Trudeau was “weak.”

The question of weakness gets to the heart of Trump’s transactional worldview. The G7 fracas was just the latest example of the growing rupture between the U.S. and the EU, as Trump takes full advantage of the leverage that America wields to correct what he says is an unbalanced relationship — heavily tilted against U.S. interests. Ironically, the EU’s ability to push back may be limited because the relationship is indeed lopsided — but not necessarily in Europe’s favor.

Interdependent Transatlantic Trade

In truth, the relationship is symbiotic, although the balance of power is not always evenly distributed. Economically, the U.S. and EU are inextricably linked, forming the largest and wealthiest market in the world. As the 28 EU ambassadors to the U.S. pointed out in a recent op-ed in The Washington Post: “The transatlantic economy accounts for half of the global gross domestic product by value, which directly supports more than 15 million high-quality jobs and $5.5 trillion in commercial sales. And nearly one-third of the world’s trade in goods occurs between the E.U. and United States alone.”

U.S. trade with the EU in goods and services totaled nearly $1.1 trillion in 2016, with the U.S. running a trade deficit with the EU of $92 billion that year, according to the Office of the U.S. Trade Representative.

But a breakdown of the numbers reveals a more nuanced picture. While the U.S. had a trade deficit in goods with the EU (nearly $150 billion in 2016), it enjoyed a surplus in services exports to the EU ($55 billion).

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Trump has focused his ire on the imbalance in goods such as machinery and equipment, ignoring services like finance, travel and technology. EU officials argue that services — not goods — form the backbone of a modern economy and, in fact, now employ more Americans than traditional manufacturing jobs, while Trump says a strong manufacturing base is essential to national security.

Despite the overall U.S. trade deficit with the EU, the bloc remains America’s largest export market, buying nearly $270 billion in goods from the U.S. — more than twice the total U.S. exporters shipped to China — and over $230 billion in services.

Meanwhile, the EU was the second-largest supplier of imports to the U.S. in 2016, sending $416.4 billion of goods and services to the U.S., down 2.6 percent from 2015, but up 25 percent from 2006.

Different sectors also produce different winners and losers. On agriculture, the EU comes out on top: U.S. exports of agricultural products to the EU totaled $11.5 billion in 2016, while EU agricultural exports came to $20.6 billion that year. But the U.S. wins out when it comes to foreign direct investment, with the EU investing $2.56 trillion in the U.S., versus $2.38 in the other direction. In fact, over 70 percent of all FDI into the U.S. comes from the European Union, a figure that has doubled over the last 15 years.

Overall, tariffs between the U.S. and EU are among the lowest in the world (averaging under 3 percent), although both sides are guilty of erecting barriers to protect their own businesses — the U.S. levies steep tariffs to shield its tobacco and cotton industries, for instance, while EU regulations fiercely guard its cars.

Trump has slammed the EU for imposing a 10 percent tariff on U.S.-built cars, while the U.S. maintains a 2.5 percent tariff on EU passenger vehicles. He’s proposed slapping hefty tariffs on EU-made cars, but the protectionist measures could backfire by hurting U.S. car companies’ businesses abroad or the tens of thousands of Americans employed by foreign carmakers in states like Alabama and South Carolina.

Likewise, Trump’s tariffs on steel and aluminum could mean higher costs for U.S. businesses that use these metals, such as construction and oil companies — costs that could be passed down to consumers on everything from beer cans to trucks.

Limitations of EU Power

Despite fears that a tit-for-tat trade war will only produce losers on both sides of the Atlantic, Trump has pressed ahead with his brinksmanship, exposing the vulnerabilities of a politically fractured 28-member bloc that’s historically been reliant on the U.S. for its security.

The European Union is primarily an economic bloc, not a political one — a distinction laid bare by the tide of populist movements that have roiled the continent.

Each EU member state is guided by its own self-interests, as the U.K.’s Brexit made clear, and members are sharply divided on issues such as migration and fiscal policy.

Despite the rise of euroskeptic parties in their own countries, Germany and France, bulwarks of the EU, continue to champion the alliance, while countries like Hungary, Poland and, most recently, Italy have experienced a surge of anti-immigrant, nationalist parties that reject orders from Brussels.

This polarization has prevented the EU from articulating a unified response to Trump’s economic broadsides and to other external threats such as Russia.

Meanwhile, Trump’s repeated denunciations of NATO and praise of Russian President Vladimir Putin have alarmed many EU member states on Russia’s periphery. But the fact that the EU lacks a unified military and has traditionally relied on the U.S. for its defense puts it at a distinct disadvantage, argues Jeremy Shapiro of the European Council on Foreign Relations.

“The simple answer is that Europeans need the alliance more than the Americans do. For Europe, the transatlantic alliance is its rock of stability in an otherwise ever-changing world and the foundation on which it has constructed European security and European integration,” he wrote in the May 15 article “Why Trump Can Safely Ignore Europe” for Foreign Affairs.

“The United States does value the transatlantic alliance. It wants help on international security issues such as Afghanistan or Syria, and U.S. officials certainly enjoy proclaiming that the United States leads the world. But the reality is that the United States doesn’t need the European alliance for its own security,” he added.

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Shapiro argues that while Europeans have the economic and military might to band together, they prefer to rely on the U.S. for their defense rather than on each other because of their own internal disputes and distrust. Until the EU can overcome these differences and agree to collective goals, the U.S. will retain the upper hand.

Trump Goes It Alone

Internal and external factors have constrained Europe’s response to Trump’s withdrawal from multilateral accords. European leaders largely shrugged off Trump’s widely anticipated decision to ditch the Paris climate agreement, vowing to forge ahead with the deal while biding their time for a change in America’s position.

But Trump’s abandonment of the Iran nuclear deal struck a chord with the EU. The Joint Comprehensive Plan of Action (JCPOA) was signed in 2015 by Iran and the U.S., France, U.K., Germany, Russia and China to limit Iran’s nuclear buildup in exchange for sanctions relief.

Iran has adhered to the terms of the agreement, allowing international inspections of its nuclear sites, relinquishing 98 percent of its uranium stockpile and mothballing most of its centrifuges. In return, Iran had tens of billions of dollars in its assets unfrozen, resumed selling oil on the global market and began inking business deals as sanctions were gradually lifted.

But Trump walked away from the accord in May, jeopardizing its future. The president complained that the deal would eventually expire and failed to curb Iran’s ballistic missile program or its destabilizing behavior in the region. EU officials argued that the agreement was meant to focus solely on the nuclear problem and that separate issues would be better addressed by preserving the accord. 

The EU has reiterated its support for the Iran nuclear deal, but without the U.S., the deal is just a shadow of itself. That’s because Trump reinstituted what are known as secondary sanctions, which prohibit any companies that do business with Iran from accessing the U.S. financial system.

While Brussels has considered activating so-called blocking statutes to shield European companies doing business in Iran from U.S. economic sanctions, the statutes have never been used. More importantly, no company is willing to risk being shut out of a $20 trillion market — whose currency is the standard in global financial transactions — just to do business with a rogue regime.

So despite the EU’s vociferous objections, there is little it can do to salvage the deal, other than relying on China and India to appease Iran and hoping that Tehran doesn’t restart its nuclear program.

Still an Indispensable Partner

Despite this asymmetric power dynamic, the EU retains significant clout, and Trump’s strong-arming can only go so far.

The U.S. needs access to the vast EU market of 500 million consumers to promote American prosperity and guard against transnational threats. As the EU ambassadors noted in their Washington Post open letter: “Simply put, the E.U. invests more in the United States, buys more American services and employs more American workers than the other way around.”

Trump’s tariffs have even galvanized EU members such as Germany, France and Britain to stick together by imposing counter-tariffs, filing legal challenges with the World Trade Organization and refusing to deal with Trump on a one-on-one basis.

Trump also cannot push European allies to the breaking point because he needs their cooperation in countering emerging geopolitical threats posed by Russia and China, both of which stand to gain from transatlantic tensions.

In fact, economists say Trump is missing a prime opportunity to team up with the Europeans to tackle China’s intellectual property theft and its cheap dumping of steel and aluminum — top complaints of the administration.

Yet Trump has reportedly gone so far as to insinuate that Europe poses a greater threat to the U.S. than China does because of its unfair trading practices. The comparisons to China have shocked EU officials, especially given the history of shared values and shared blood between the U.S. and Europe.

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Trump may discover how much he needs those bonds if a major crisis erupts. As past Obama officials have pointed out, when a crisis hits, whether 9/11 or the global financial recession, Europe is the first place America calls.

Return to Realpolitik

Sen. Chuck Schumer (D-N.Y.) blasted Trump for being unable to “distinguish between our allies and adversaries.” Yet whether friend or foe, Trump has no qualms about throwing American weight around to get others to bend to his will.

The U.S. remains the world’s dominant superpower, and the Trump administration wants to keep it that way.

This mindset is a significant shift away from the post-World War II architecture of multilateralism that the U.S. and Europe built based on liberal democratic ideals and free trade, which ushered in an unprecedented period of peace and stability. Instead, it marks a revival of realpolitik, which focuses on how states are motivated by practical self-interests, rather than morals or ideology. Realpolitik hinges on power: who has it, who exercises it and what are the repercussions of these power dynamics.

Realpolitik sees international relations as a zero-sum game comprising winners and losers. This fits right into Trump’s all-or-nothing mentality. He’s not interested in honoring deals made by someone else (primarily former President Obama). He wants to make deals that he believes put the U.S. on top. Multilateral agreements don’t suit this style of thinking. Bilateral agreements, where Trump can tout the U.S. as the winner, do.

A senior White House official described the Trump doctrine as “We’re America, Bitch,” according to a June 11 article by Jeffrey Goldberg for The Atlantic. Another official likened this unapologetic approach to “No Friends, No Enemies,” inferring that the U.S. doesn’t owe its allies anything. “We have to explain to [Trump] that countries that have worked with us together in the past expect a level of loyalty from us, but he doesn’t believe that this should factor into the equation,” the official told Goldberg.

During the Cold War, realpolitik dominated America’s rivalry with the Soviet Union, as both sides engaged in an all-or-nothing battle for global supremacy. After the fall of communism, the U.S. became the world’s sole superpower and sought to spread democracy and market-driven capitalism around the world.

Trump no longer sees the value of such efforts, echoing American voters’ concerns that the U.S. has become the world’s policeman, “taking on the costs of global leadership and submitting itself to rules” with little to show in return, as a June 7 editorial in The Economist put it.

But the magazine argues that pursuing a policy of “America Alone” is costlier in the long run. “On the contrary, rules help deter aggressors, shape countries’ behaviour, safeguard American interests and create a mechanism to help solve problems from trade to climate change,” it opined.

With the Cold War seemingly confined to history, a multi-polar world has risen in its place. In this complex new landscape, the U.S. has retreated from its traditional role as a guarantor of global stability; Russian President Putin has cemented his grip on power; Europe is riven by internal divisions; the Middle East is plagued by conflict; China has become a major global player; and non-state actors such as the Islamic State are upending conventional notions of warfare.

For the Trump administration, these challenges mean a return to the great power competition that defined the Cold War.

Instead of relying on the construct of post-World War II multilateralism, Trump espouses a new National Security Strategy (NSS) based on four pillars: protect the homeland, promote American prosperity, preserve peace through strength and advance American influence. According to the White House, this is “a return to principled realism.”

With regard to Europe, the White House has three main goals, according to the NSS: correct trade imbalances, get European partners to shoulder more of the financial burden for their security under NATO and check Russian aggression and China’s growing power.

Trade is a key part of the NSS paradigm, with Trump arguing that his proposed tariffs are based on national security concerns because manufacturing constitutes a core area of American prosperity. It’s a dubious legal argument, though — one that could open the floodgates for other nations to use security as a pretext to enact trade barriers, endangering the rules-based international trading system that the U.S. helped forge.

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Western Wakeup Call

While the U.S. dukes it out with the EU in a tariff war, it still needs the bloc to counter Russia and China, two states that the new NSS calls out as threats to U.S. power.

A. Wess Mitchell, assistant secretary of state for European and Eurasian affairs, recently tried to soften the edges of Trump’s bellicose rhetoric on tariffs during a talk at the conservative Heritage Foundation titled “The Transatlantic Bond: Preserving the West.” He laid out Trump’s foreign policy vision for Europe, emphasizing the need for continued cooperation in an era of big power competition.

The speech asserted that U.S. strength is the foundation of the current world order and reaffirmed America’s longstanding relationship with Europe. It also pitted “the West” against Russia and China.

“Preserving the West cannot happen without Europe,” Mitchell said, adding that “Europe is our largest economic relationship.”

“Russia and China want to break the West,” he declared, arguing that Russia wants to splinter and shatter it, while China wants to supplant it.

“The power of ideas” is necessary to blunt the growing influence of Russia, China and, from the U.S. perspective, Iran, which the administration views as existential threats to liberal democracy.

Mitchell said Europe needs to take these geopolitical challenges seriously, starting with its defense.

Like past administrations, Trump wants allies to pay more for their collective security. Only the U.K., Estonia and Greece hit the previously agreed-upon target of spending 2 percent of GDP on NATO defense in 2017. The U.S. remained the largest defense spender in the military alliance, at 3.57 percent of its GDP.

“Europeans cannot expect Americans to care more about their security than they do,” Mitchell said. But he sweetened his criticism by noting that as a whole, NATO has increased defense spending by 5.1 percent and that 26 allies have contributed to NATO missions in Afghanistan and elsewhere.

For its part, the U.S. is tackling the Russia challenge head-on, Mitchell said. That includes beefing up U.S. contributions to NATO to shore up Europe’s eastern flank, diversifying Europe’s energy grids, strengthening cyber tools to debunk Russian propaganda and engaging Ukraine and Georgia.

At times, Mitchell even waxed poetic about U.S.-European relations. “After World War II, our grandparents’ generation laid the foundation for future Western security and prosperity through Atlantic cooperation,” he said. Today, “we must view the West as a community of democratic nations united by history, culture and shared sacrifice” to counter a resurgent Russia and a rising China.

Yet Mitchell’s defense of the transatlantic alliance doesn’t exactly square with Trump’s repeated snubs and attacks on Europeans while he courts Russia and China and cozies up to authoritarian regimes in Egypt, Turkey and elsewhere.

Mitchell himself seemed to single out engagement with Central and Eastern European nations — many of which have embraced xenophobic, anti-establishment policies — while pointedly leaving out Western stalwarts such as Britain, France and Germany.

The omission reinforced perceptions that Trump has little need for Europe’s old guard. But this cold shoulder is nothing new. Washington and Brussels have clashed numerous times over the years, notably during the Iraq War. Still, experts worry that the current feuds over Iran, Russia, China, trade, defense and climate change could herald a deeper, more permanent estrangement.

Yet others point out that in many of these same areas, American and European interests still converge — and the fundamentals on which the transatlantic alliance was built will outlast whoever occupies the Oval Office.

Donald Tusk, president of the European Council, writing in a June 6 op-ed for The New York Times, conceded that Europe needs to learn to “act on our own.”

But he added that “Europe should, in a way, be grateful to President Trump. His decisions have made us realize that we need to depend on one another. Europe must now do everything in its power to protect the trans-Atlantic bond, in spite of today’s mood.”


About the Author

Aileen Torres-Bennett is a contributing writer for The Washington Diplomat. Anna Gawel (@diplomatnews) is managing editor of The Washington Diplomat.

Last Edited on June 29, 2018