Q&A with Douglas A. Rediker
The second Trump administration has turned the U.S.-European trade relationship on its head with its introduction and frequent adjustments of tariffs. We asked Douglas A. Rediker to explain the shift and analyze the larger implications of an unstable transatlantic economic framework.
Where do U.S.-European economic relations stand now after the turmoil of “Liberation Week” and the controversial 17% tariffs negotiated in the July U.S.-EU trade agreement? What future flashpoints do you see in the relationship?
U.S.–European economic relations have steadied since April’s turmoil, but the July agreement entrenched rather than resolved core tensions. Both sides avoided a broader rupture, but that agreement papered over rather than resolved deep structural tensions. The EU ultimately pushed back less than expected, including on the Section 899 “revenge tax” issue, which reinforced Trump’s belief that maximalist pressure works. The EU implicitly accepted a baseline of tariffs that leaves both sides operating within what is, in effect, a managed trade war, uneasily recognizing U.S. willingness to deploy tariffs as a first resort and the use of security-based authorities to pursue economic aims.
Looking ahead, several flashpoints loom: the unfinished digital-services and data-transfer agenda; potential U.S. moves on EVs, industrial subsidies, and “national security” screening of outbound investment; disputes over carbon-border adjustments; and frictions over China policy, where deep distrust persists. Each side fears the other will cut a deal at its expense, as Trump’s tariff threats squandered what had been a nascent convergence.
In what ways could the Supreme Court’s review of presidential tariff authority reshape Europe’s leverage in ongoing and future trade negotiations?
A Supreme Court ruling that curtails presidential tariff authority under International Economic Emergency Powers Act (IEEPA) could come as soon as year-end 2025 or early 2026, and could quietly rebalance Europe’s leverage in transatlantic trade. If the Court strikes down broad IEEPA-based tariffs, many of Trump’s recent “deals” with international partners, including the EU—which are informal understandings not fully codified in binding schedules or annexes—would rest on shaky legal ground. That could force more formal renegotiations, giving Europe an opening to revisit terms, but the EU will need to tread carefully to preserve relief from Sections 232 and 301 tariffs, and avoid being seen as blowing up deals with Washington. Trump’s fallback tools, including time limited, across-the-board tariffs under Section 122, and more targeted actions under 232, 301 would be more constrained, product- and country-specific, and harder to wield as generalized threats. A Court-mandated refund of unlawfully collected duties and interest could further sharpen Europe’s hand by increasing U.S. fiscal and political costs. Europe’s leverage would rise—but so would the pressure not to use it recklessly.
How are EU–China trade dynamics evolving, and what are the implications for European competitiveness?
EU–China trade is drifting from uneasy interdependence toward managed confrontation, with direct consequences for Europe’s competitiveness. Beijing’s overcapacity is spilling into Europe: Chinese exports are surging and a new “China shock 2.0” is hitting core sectors like autos, machinery, and chemicals, eroding margins for German and other manufacturers in both the EU and third markets.
Brussels has responded by weaponizing its expanded trade-defense toolkit- definitive countervailing duties on Chinese EVs, probes into subsidized wind turbines, solar panels, medical devices, tires, and chemicals, and now the removal of the €150 de minimis duty-free threshold for e-commerce packages dominated by Chinese platforms. China is retaliating with its own investigations into EU food and drink exports and tighter rare-earth export controls, raising input-cost and security risks for European industry.
For Europe, this is less about following Washington than about defending its own industrial base. The policy challenge now is to turn defensive de-risking into an offensive competitiveness strategy—scaling green and advanced manufacturing at home while avoiding a spiral of tit-for-tat protectionism that would undercut growth.
