The Guardian view on Europe's Trump challenge: Brussels must hold its nerve and think big

The Guardian

18 hours ago

As the world has grown used to Donald Trump delivering aggressive ultimatums that are then revised or watered down, the shock-and-awe effect of a presidential edict on Truth Social has somewhat diminished. On Saturday, Mr Trump unexpectedly announced that the United States would hit the European Union with swingeing tariffs on goods of 30% from 1 August. That certainly prompted urgent weekend discussions in Brussels, Paris and Berlin. But for now, the European Commission president, Ursula von der Leyen, is placing all countermeasures on hold, in the hope that what the German chancellor, Friedrich Merz, described as 'reasonable solutions' can be found.
Given the stakes, betting on the success of a softly, softly approach to trade negotiations remains sensible. Mr Trump's previous imposition of 25% tariffs on European carmakers (on top of the pre-existing 2.5% rate) has already panicked German manufacturers in particular. But the president's attempts to further batter Europe into economic submission, risking a trade war with an ally and threatening an annual €1.7tn worth of commercial activity, would be likely to trigger another market backlash if taken to the brink.
The last time that happened, following 'liberation day' in April, Mr Trump blinked. As the ante is upped once more, it is also – rightly – a European concern that outright confrontation over trade could sour talks with the White House in relation to Ukraine. Mr Trump's pledge on Monday to send Patriot missiles to Ukraine, along with a broader weapons deal to be financed by Europe, appeared to confirm the wisdom of the EU's cautious approach as the president's unedifying bromance with Vladimir Putin sours.
Nevertheless, in an era when business as usual is highly unlikely to return, the latest salvo on tariffs has again underlined the need for the EU to deepen its economic resilience and independence. Sadly, on that score a sufficient sense of urgency is still missing.
In September, it will be a year since the publication of Mario Draghi's report on EU competitiveness, in which the former president of the European Central Bank called for a level of annual investment equivalent to three times that delivered by the postwar Marshall plan. Since then, the second coming of Mr Trump has added to an already formidable cocktail of challenges, including the need to revive stalling economies, fund the green transition and increase spending on defence and security. Yet Ms von der Leyen, who commissioned Mr Draghi's report, has failed to follow it up with anything like the fiscal ambition called for by its author. Instead, by rowing back on some green measures, and courting the populist right on issues such as migration, she has antagonised progressives in the centrist coalition that re-elected her for a second term.
The EU needs to think bigger and more boldly. On Wednesday, the European Commission will unveil its proposed EU budget for 2028-34. Echoing Mr Draghi's vision, Spain unsuccessfully lobbied for it to be doubled to more than €2tn, with much of the increase to be financed through common borrowing. Such a step-change would have allowed the kind of spending that could safeguard the European social model at a time of transition, and of economic and environmental instability. The commission, heavily influenced by more fiscally conservative member states, will offer something far more cautious. With more turbulence undoubtedly to come, it is unlikely to be enough.
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