US President Donald Trump may be playing with fire. His administration has exempted the European Union from heavy duties on imported steel and aluminum. The exemption will last until May 1.
A few days later, on May 13, Trump must decide whether to waive sanctions on Iran pursuant to the Joint Comprehensive Plan of Action (JCPOA), the deal arranged by the world community in 2015 to curb the military projection of Tehran’s nuclear program.
So within the next 40 days or so, the EU will be called on to find an accommodation with Trump on both his metal tariffs and his request to support changes in the Iran nuclear pact. Given the US president’s transactional approach to foreign policy, and the temporal coincidence of the two negotiations, he could be tempted to barter a permanent exemption from trade tariffs for the EU’s backing of modifications to the JCPOA.
Trump has tried to use a similar tactic with China, linking negotiations on the reduction of the Chinese trade surplus with the United States to the North Korean nuclear crisis.
Trump’s bargaining game
In January, the US president suspended nuclear-related penalties on Iran for another four months. But he also threatened to scrap the nuke accord if EU signatories did not agree to change part of it. What he wants is a supplemental agreement to limit Tehran’s uranium enrichment permanently, bolster the regime of international inspections, and impose new penalties if the Iranians develop or test long-range missiles.
Trump’s new national security adviser, Iran hawk John Bolton, has probably been picked to oversee Washington’s possible withdrawal from the JCPOA.
The EU has several times joined China and Russia in emphasizing that the nuclear pact is working. As for the Iranian missile program, European leaders believe it should be dealt with outside the scope of the JCPOA. This, combined with the EU’s firm belief that the artificial deadline set by Trump is not conducive to resolving the problem of steel and aluminum overcapacity, makes any bargaining game by the US president a risky gamble.
China looks to the EU
Trans-Atlantic relations are already at a historical low. Aside from bilateral trade and Iranian military activities, Trump has disagreements with the EU and its member countries over their financing commitments to the Northern Atlantic Treaty Organization, the Israeli-Palestinian crisis and the Paris Agreement on climate change. Washington and European chanceries apparently agree only on one thing, Russia, blamed and sanctioned for the recent poisoning of Sergei Skripal, a former Russian spy, and his daughter in Britain.
If the US president were to force the hand of European allies further, he could push them back into China’s fold. At the outset of Trump’s presidency, the EU and Beijing stepped up bilateral cooperation to safeguard free trade and multilateralism. That entente against the protectionist “bogeyman” in the White House has weakened because of disputes between the two parties over anti-dumping, investment, intellectual-property and international-standards issues.
The European bloc has adopted specific measures to face unfair commercial and investment practices by China, and Trump is seeking support from EU leaders for his tough trade policy toward Beijing. Faced with the US president’s intention to slap tariffs on US$60 billion worth of Chinese exports, the Asian giant could try to turn the tables and team up with the EU again.
Wang Hejun, head of the Trade Remedy and Investigation Bureau at China’s Ministry of Commerce, said on March 13 that Beijing had “noticed” the EU’s strong opposition to Trump’s metal tariffs and its willingness to take countermeasures against them.
Before it was given a temporary exemption, the EU had pointed out that it would work with allies and partners, as well as at the World Trade Organization, to counter Trump’s duties. The European grouping believes overcapacity is the real problem in the steel and aluminum sectors, and China, as the world’s largest producer and a source of global increase in capacity, has a key role to play in solving this problem.
European Commission sources told Asia Times that “for the EU, the most important would be to focus on root causes of the issue.” They added that the bloc would use to this purpose “all possible channels, including the G7, G20 and the dedicated Global Forum on Steel Excess Capacity, of which China is also a member.”
The Bolton factor
The EU has so far remained united on opposing Trump’s policies on trade and Iran. Thus there is no “new Europe” to leverage against core EU states (Germany and France), the sort of diplomatic scenario Bolton, a former US ambassador to the United Nations, used during the George W Bush presidency.
Bolton should have learned a lot about the unintended consequences of a reckless action from his experience in the Bush administration. The 2003 Iraq war fostered Iran’s strategic advances in the Middle East and planted the seeds of the rise of ISIS. Today, Trump’s repeated attempts to sabotage the JCPOA and international commerce could encourage the EU to forge stricter relations with China despite all its defects and ambiguities.