Caught in the Trade War Crossfire: Will Europe Feel the Heat?
Anthony Gardner, who served as U.S. ambassador to the European Union just before Trump’s first term, delivered a stark warning: the trade war between the United States and China could have a significant impact on Europe. “The number one issue is not NATO, not even Ukraine, as serious as that is,” Gardner asserted, “The number one issue is the displacement of Chinese exports that are going to the U.S. and will now go to Europe.”
A Ripple Effect Across the Atlantic
The ripple effect of that redirection, Gardner believes, could be devastating. “There probably will be a significant displacement effect at an incredibly fragile time,” he noted, “Many industries are barely scraping by.” This sudden influx of Chinese goods could destabilize European markets, triggering job losses, economic stagnation and, potentially, a rise in political extremism.
“It will have enormous consequences, potentially promoting deindustrialization and populist parties. A drift to the right as these people search for answers, often extreme answers to their questions,” Gardner stated. “This is very real. It could happen pretty quickly.” Globally, the increasing trade tensions could gradually push Europe toward a recession.
Governments in Europe share these concerns, bracing for the possibility of being caught between the two global economic giants, the US and China. “We don’t have the luxury of only looking at the immediate impact of U.S. tariffs on EU goods,” said one EU diplomat, who asked for anonymity to speak candidly. “The ripple effect of changing trade flows as a result of U.S. tariffs on China might come crashing down on us sooner than we’d like.”
Short-Term Pain, Long-Term Uncertainty
Europe’s anxieties, to a certain extent, are justified. EU countries would indeed feel the heat of a trade war with China. Tariffs and disrupted supply chains would depress trade and economic growth at a time when the Eurozone is already grappling with a challenging economic environment. Germany, Europe’s largest and most export-oriented economy, is projected to experience its second consecutive year of negative growth.
A Less Severe Impact Compared to Others
While the ramifications of a trade war are undeniable, initial estimations suggest that Europe might fare slightly better than other regions. According to the Kiel Institute for the World Economy, Europe’s gross domestic product could fall by only 0.14 percent in the first year of a Trump-fueled trade war. In the longer term, GDP would likely decline by just 0.2 percent, significantly less severe than the losses projected for the United States and China. The think tank warns that these figures should be seen as a best-case scenario, and the severity of the impact could escalate depending on the intensity and duration of the trade tensions.
What political consequences could arise in Europe due to the economic fallout of the US-China trade war?
Caught in the Trade War Crossfire: Will Europe Feel the Heat?
Joining us today is Anthony Gardner, former U.S. Ambassador to the European Union, to discuss the potential impact of the US-China trade war on Europe. Ambassador Gardner, thank you for being with us.
**Gardner:** It’s a pleasure to be here.
Ambassador Gardner, you recently issued a stark warning about the consequences of this trade war for Europe. You’ve called it the “number one issue” facing the continent, even surpassing concerns about NATO and the conflict in Ukraine. Could you elaborate on why?
**Gardner:** Certainly. The trade war is likely to cause a significant redirection of Chinese exports. Goods that were previously destined for the US market will now be flooding into Europe. This surge could destabilize European economies, particularly those heavily reliant on manufacturing [[1](https://www.politico.eu/article/europe-trade-tariffs-donald-trump-united-states-china-trade-war/)]. Many industries are already struggling, and this influx of cheaper Chinese products could lead to job losses, economic stagnation, and potentially even contribute to the rise of populist parties.
You mentioned the possibility of political extremism as a consequence. Can you explain how that might come about?
**Gardner:** When people feel economically insecure, they become more susceptible to populist rhetoric and promises of easy solutions, even if those solutions are extreme. If people lose their jobs due to the influx of Chinese goods, they may be more inclined to support parties that blame globalization, immigration, or other scapegoats.
What steps can Europe take to mitigate the negative effects of this trade war?
**Gardner:** The EU needs a comprehensive strategy to address this challenge. This could include targeted support for industries most at risk, investing in education and retraining programs to help workers adapt to a changing economy, and pursuing diplomatic solutions to de-escalate the trade tensions between the US and China. It’s a complex issue, but inaction is not an option.
Ambassador Gardner, thank you for sharing your insights with us today.
**Gardner:** You’re welcome.
