One of the high points of Trump's present term is the way Europe has grovelled before him. The EU's resistance to Trump on Ukraine has been feeble. And on trade, it has signed a pact that allows the US to impose a tariff of 15 per cent so that Europe has the privilege of accessing the US market.
There is also the way Europe's leaders- Macron, Starmer, von der Leyen- have been treated by Trump. Europe's public is said to be seething but that has not influence government policy.
Some Europeans are beginning to think the unthinkable: Europe must decouple from the US. Martin Sandbu, columnist of the FT says this must happen in three areas: trade, finance and defence.
On trade, Europe must reduce trade exposure to the US market below what the private sector is having now. How to do this? Reduce incentives for exports to the US and retaliate against US tariffs by imposing tariffs on the US, notably on their services exports. Both exports to and imports from the US must fall, so that Europe is less vulneable to American pressure.
On finance, Europe must stop exporting capital to the US- use regulation to acheive this.
On defence, Europe must become more self-sufficient- presumably by spending more.
Is it feasible? European reliance on the US defence shield is the key. The answer is not just the gradual removal of the shield. Europe has to rethink its relationship with Russia. As long as Europe believes Russia is a threat and assumes a hostile posture, it cannot rid itself of the American defence shield.
The trade and finance exposures are easier to correct. But they will certain entail economic costs in the medium-term. Europe will have to sacrifice growth and well-being. That is even more difficult than self-sufficiency in defence.
When the US imposed tariffs of 39 per cent on Switzerland, the country's President rushed to the US to negotiate a lower tariff. She was rebuffed. Then, leading businessmen called on Trump with gifts and managed to get the tariff down to 15 per cent.
Switzerland has a per capita income slightly higher than that of America's $89,000. It is one of the richest countries in the world. Yet, the Swiss don't have it in them to stand up to the US if it means a drop in the standard of living. The same is true of the rest of Europe. Decades of dependence on US largesse for defence has got the continent used to a soft life.
Europe can decouple from the US only if it is willing to make a huge shift in foreign policy that reorients its relationship with Russia and China. One can't see that happening.
