The Big Stick and the Olive Branch: Will US-EU Trade See a "Lightning War" or a "Protracted Battle"?

Trump signature "tariff stick" and "art of the deal" are casting a shadow over the international stage. Recently, in an uncharacteristic move, the European Union swiftly responded to Trump's tariff threats by agreeing to "fast-track" trade talks. This action not only reveals Europe's apprehension regarding potential high tariffs but also signals that an unpredictable US-EU trade "lightning war" may be about to begin.

I. "Speed and Fury" Under Tariff Threats: The EU's Swift Response

Trump's social media post once again demonstrated his unique negotiation style: first, extreme pressure with a 50% tariff (which he himself "generously" delayed until July 9), and then, after the EU's positive response, quickly interpreting it as a "positive event," while re-emphasizing his core demand for reciprocal market access.

The EU's "fast-track" strategy this time around has undoubtedly learned lessons from the US-China trade war during Trump's previous term. Faced with this unconventional negotiator, Europe seems to have realized that a "delaying tactic" might only invite more severe penalties. Rather than waiting for high tariffs to materialize, it's better to proactively seek some form of "truce agreement" or preliminary framework before the tariffs take effect. This "meet speed with speed" approach reflects the EU's pragmatic stance and its determination to prevent further deterioration of bilateral trade relations.

II. Trump's "China Model" Replicated: A "Market Opening" Declaration for EU Trade

Trump's social media post explicitly mentioned "my same demand to China," which is to "open up the European Nations for Trade with the United States of America." This suggests that, should Trump re-enter the White House, his core demands for EU trade negotiations will mirror those he made to China:

• Reciprocity in Market Access: Trump will continue to pressure the EU to further open its markets in agriculture, services, and automotive sectors, and to reduce non-tariff barriers, in order to achieve what he calls "fair trade."

• Reduction of Trade Deficits: Reducing the US trade deficit with the EU will be a key bargaining chip for him. He may continue to accuse the EU of protectionist trade policies and use this as leverage.

• Calls for Structural Reform: Although the EU's economic system is distinctly different from China's, Trump may leverage his influence to push the EU for "structural reforms" in certain trade practices he deems unfair.

This replication of the "China model" means that US-EU trade negotiations will no longer be simple tariff reductions but may delve into more complex regulatory, standard, and even industrial policy layers.

III. Negotiation Outlook: Lightning War or Protracted Consumption?

Scenario 1: Quick Preliminary Agreement (Potential "Lightning War"):

• Likelihood: Medium to High.

• Reasoning: The EU's urgent declaration indicates its strong desire to avoid tariffs. If both sides can reach a preliminary agreement on some "low-hanging fruit" (such as minor tariff adjustments in certain agricultural products or specific sectors) before July 9, or at least agree to suspend tariff implementation and establish a high-level dialogue mechanism, this will buy them time and space. Trump also likes to conclude "deals" quickly to demonstrate his "winner" status.

• Challenges: EU internal coordination, and whether Trump will be satisfied with an initial agreement and not make overly aggressive demands.

Scenario 2: Fight While Talking, Escalating Friction (Risk of "Protracted Battle"):

• Likelihood: Higher.

• Reasoning: Even if the EU agrees to accelerate talks, resolving complex structural trade issues within a month is almost impossible. If tariffs are implemented as scheduled on July 9, the EU will most likely retaliate. At that point, a new US-EU trade conflict will be inevitable. Negotiations will then become a protracted struggle under the shadow of a tariff war, with a slower pace and increased uncertainty.

• Challenges: Both economies will suffer losses, and global supply chains will also be disrupted.

Scenario 3: A New Normal of Compromise and Cooperation:

• Likelihood: In the long run, this is inevitable.

• Reasoning: Despite their differences, as the world's two largest economies, the US and the EU still have broad scope for cooperation in addressing common challenges (such as responding to China's economic rise, global climate change, and digital economy governance). Ultimately, both sides may find new models of cooperation while preserving their core interests, thereby building more resilient trade relations.

IV. Impact on the Global Trade Landscape

The trajectory of US-EU trade relations will have a profound impact on the global trade landscape. If both sides can resolve their differences through negotiation, it will instill confidence in global free trade. Conversely, if they descend into a long-term trade conflict, it will exacerbate global economic uncertainty and may prompt countries to further review and adjust their supply chain strategies.

Conclusion: Trump's tariff threat has successfully brought the EU back to the negotiating table, but the depth and breadth of the negotiations will extend far beyond tariffs themselves. In the coming weeks and months, negotiating teams on both sides of the Atlantic will face unprecedented pressure. This game of both big sticks and olive branches will ultimately reveal the future direction of US-EU trade relations: a swift "deal" where each side gets something, or a search for a new balance amidst friction? We await with anticipation.