The European Union is open to discussions with US President Donald Trump, aiming to prevent a trade conflict that could harm both economies and the global market.
Cautious Approach from EU Officials
Though Trump has not yet imposed tariffs on European goods, EU officials are taking a cautious stance. They have chosen to adopt a “wait and see” approach to his administration’s actions.
Von der Leyen on Global Trade Trends
At the World Economic Forum, European Commission President Ursula von der Leyen highlighted a growing trend of intense global competition over the past 25 years. She noted the increasing reliance on sanctions, export controls, and tariffs to protect national interests. Von der Leyen stated, “We will need to work together to avoid a global race to the bottom. Because it is in no one’s interest to break the bonds in the global economy. Rather, we need to modernize the rules to sustain our ability to produce mutual gain for our citizens.”
Trump Aims to Tackle US Trade Deficit
Trump expressed his intention to address the US trade deficit with the EU by either imposing tariffs or increasing energy exports. He also directed federal agencies to investigate trade imbalances and unfair practices, including currency manipulation.
Germany’s Trade Surplus May Draw Attention
Germany, with a significant trade surplus with the US, could be targeted by Trump’s administration. However, German Chancellor Olaf Scholz remains cautiously optimistic. He stated, “The United States is our closest ally outside Europe. And I will do everything in my power to ensure that it stays that way.” Scholz added, “My first good conversations with President Trump and also the contacts between our advisers point in this direction.”
Euro Rises Against the Dollar
The euro saw a slight rise against the dollar on Monday, which likely relieved European Central Bank policymakers. They are expected to cut interest rates to help boost the region’s sluggish economy. Mohit Kumar of Jefferies noted, “Most of the (Trump) comments were related to the ‘America’s first’ policy, but the initial comments appear better than feared by the market.” He anticipates further rate cuts from the ECB in the coming months.
