The clock runs and the fateful date of 1is August is fast approaching. In Brussels, negotiations have continued since the announcement of July 12 of an American customs law of 30 % on European products. Last week, the European Commerce Commissioner went to Washington for new negotiations, in vain.
From then on in Paris, a certain annoyance is felt with this desire to show more firmness. This Tuesday, the Minister of Industry and Energy, Marc Ferracci, brought together in Bercy a national council of exceptional industry. Was present: all the industrial sectors of the country who came to “build a common position of French industry on European posture in current commercial negotiations between the European Commission and the Trump administration”.
“You have to get into a balance of power with Donald Trump”
“The position of Europe must be a negotiation position but also a position of firmness,” said the minister at the exit of the Council, happy with the consensus found between the various representatives. “We have, in particular,” said that a number of response measures had to be triggered in the event that the agreement was not found by 1is August, “he added.
For Thomas Grjebine, head of the international “macroeconomics and international” program at CEPII, the French strategy is the right one in the face of an American president who only knows the force: “We must go into a balance of power with Donald Trump if not the result will necessarily be unfavorable”, explains the economist. “So you have to harden the game, but for that you have to have the kidneys sufficiently solid because it may overcome and test if European unit is in this context.”
“France is less exposed”
In this game, Europe appears well helpless. If the various French industrial sectors have managed to find a consensus, as announced by Marc Ferracci, despite several differences of interest, nothing is less certain for all the member states of the EU. First of all, Germany and Italy who absolutely wish to lead to an agreement with the United States by 1is August to avoid climbing. “When you produce in Europe and you export, you are more vulnerable to a trade war,” analyzes Thomas Grjebine.
Exports in Germany represent almost 4 % of its GDP and trade with the United States is largely surplus. Conversely, French exchanges with the United States are in deficit and its exports represent only 1.5 % of its GDP. “France is less exposed than its European neighbors even if certain sectors such as luxury or wine are likely to suffer from a trade war”.
On a continent, the European Union is surplus on these exchanges with the United States. By adding the services exchanged, largely dominated by the United States, Europe retains a surplus of 50 billion euros. For Thomas Grjebine, the posture of France is partly explained by the fact that it does not wish to pay for an excess essentially drawn by Germany.
The “economic bazooka”
In a joint press release, French manufacturers recalled the tools by the commission to “defend the interests of the European Union”. They recommend adopting, “in the event of a failure of negotiations”, a first list of countermeasures evaluated up to 21 billion euros and consider adoption in the wake of a second list of countermeasures. According to the minister, these countermeasures could amount to 90 billion euros. He also claims the use of the “anti-coercion instrument”, says the “economic bazooka”, which prevents access to European public markets or the blocking of certain investments. It will also tax American services.
On July 12, Emmanuel Macron asked the Commission to study its trigger. Ursula von der Leyen indicated that this tool was designed “for exceptional circumstances”. She considered that the current situation did not justify its use. Other series of retaliatory measures are already in the drawers of Brussels, in particular a list of 72 billion euros in targeted American products. Several member states fear its use, fearing an escalation.
“Donald Trump knows that it is complicated for Europe to remain united and to make common decisions”
The showdown therefore promises to be just as tense between France and the European institution, as with the United States. From tomorrow, Emmanuel Macron goes to Germany to exchange with Chancellor Friedrich Merz. No doubt, the subject of a negotiation or a frontal confrontation with Donald Trump should be at the heart of the discussions. The German Chancellor wishes him put pressure on the United States to achieve a rapid negotiation agreement, protecting the German economy. On the Bercy side, some fear that an inequitable agreement leads to the loss of European confidence of companies.
Last May, questioned by Public Senate, the economist and specialist in international trade, Vincent Vicard defined Donald Trump’s strategy as a “test on the ability of Europeans to face and respond collectively”.
“I do not know if it is a conscious strategy,” replies Thomas Grjebine. “What is certain is that Donald Trump knows that it is complicated for Europe to remain united and to make common decisions. We see it very well here ”.