Stephen Jen warns that the trade war is widening—and the EU may be next in the firing line. With President Trump threatening a 50% tariff on EU imports starting next month, Jen outlines the competitive and geopolitical tensions underpinning this move.
Unlike US-China trade, which is largely inter-industry, the US-EU trade relationship is deeply intra-industry, meaning both sides export and compete within similar sectors like autos and pharma. This makes the dynamic more directly confrontational, even if the nature of the competition differs.
Jen revisits the concept of Fortress Europe, suggesting that Trump’s escalation could intentionally undermine the EU’s internal trade advantage, just as it did during Brexit. He also points to the role of multinational tax and labour arbitrage in globalisation, arguing that Trump’s strategy is designed to dismantle Globalisation 1.0 and force a realignment of corporate footprints.
Still, Jen expects Europe’s response to differ from China’s: more creative, potentially involving services, and less likely to escalate the tariff war outright. But the path ahead, he notes, will likely be just as messy.
Key Quote
“The trade negotiations with the EU could be as messy as those with China, but for different reasons.”
Table of Contents
- Intra versus inter-industry trade.
- Fortress Europe.
- US multinational corporations.
- The EU likely won’t follow China’s strategy.
- Bottom line.
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