Trump and European Commission President Jean-Claude Juncker have announced that the US and EU will work together to avoid a potentially ruinous trade war.

By Daniel Herborn

Posted on July 26, 2018

One could get whiplash from following Trump’s rapidly shifting positions on the EU. Less than two weeks ago, Trump told a reporter that he considered the EU a “foe”. Now, they are back as close friends.

After his meeting with European Commission President Jean-Claude Juncker (the European Commission is the executive branch of the EU), Trump wrote on Twitter that it was “great to be back on track with the European Union”.

Shortly after the pair announced the new agreement, the Dow Jones surged more than 150 points.

Trump and Juncker released a joint statement

Trump and Juncker released a joint statement announcing they had met “to launch a new phase in the relationship between the United States and the European Union – a phase of close friendship, of strong trade relations in which both of us will win, of working better together for global security and prosperity, and of fighting jointly against terrorism.”

The statement goes on to outline the tremendous economic power of the traditional allies, which collectively totals more than 50 per cent of the world’s GDP. It also mentions the existing bilateral trade relationship worth US$1 trillion.

“We want to further strengthen this trade relationship to the benefit of all American and European citizens,” the statement continues.

“This is why we agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods. We will also work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products, as well as soybeans.”

The pair agreed to forestall tariffs on cars. They will also continue discussions seeking to “resolve” one of the major points of contention, the US tariffs on steel and aluminium as well as the tariffs the EU was proposing to impose in direct retaliation.

The Alliance of Automobile Manufacturers welcomed the agreement to move away from imposing tariffs, saying today’s agreement “demonstrates that bilateral negotiations are a more effective approach to resolving trade barriers, not increasing tariffs.”

Juncker and Trump also promised to continue working cooperatively “in order to ease trade, reduce buereaucratic obstacles, and slash costs.”

Trump and Juncker hailing a new era of cooperation between the US and EU

After a meeting at the White House, Trump and European Commission President Jean-Claude Juncker said the talks would also seek to “resolve” U.S. tariffs on steel and aluminium and Europe’s retaliatory duties, singalling a policy U-turn from Trump’s signature import protections for American steel and aluminium.

The US and EU also vowed to work together more closely on energy, with the EU seeking to import more liquefied natural gas from the US to diversify its energy supply. US farmers will also benefit from this move.

Key US and EU advisors will also form an Executive Working Group to implement the proposed changes out of the summit.

A change of gears for Trump on EU

Trump even tweeted a photograph of him embracing Juncker to show the two parties still “love each other”.

The marked tonal shift between Trump’s previous defiance of the EU and today’s message of cooperation was seen by some commentators as a sign the White House is responding to criticism. Some prominents members of Trump’s own Republican party had vociferously opposed the steel and aluminium tariffs.

Trump had also upset leaders of other G7 nations with his confrontational approach to trade.

In other White House news, Trump moved back his planned meeting with Vladimir Putin. It was not clear whether Russia had ever formally accepted the invitation to the White House, but it eases the political fallout of Trump’s widely unpopular meeting with Putin in Helsinki.