What does Biden taking the throne mean for US-EU trade relations?

Summary

• Change in current US presidency indicate a lot is set to change in US-EU trade equations.
• Under the previous government, the US-EU trade was hampered due to a trade war.
• More recently, the Airbus-Boeing feud led to a hostility between both the regions which further damaged trade channels between them.
• Joe Biden’s win would drastically improve the scenario for EU exports, though it may not be the end of the spat.
• EU and US might see a disagreement when it comes to repairing the ties with China.

With Joe Biden elected as president of the United States, a lot is set to change, particularly in the trade sector. The harsh views maintained by the previous president Donald Trump with regards to international trade damaged the trade channels severely between the US and EU. His opinion that the European Union has been taking advantage of the United States led him to levy protectionist taxes on EU imports into the country.

The victory of Joe Biden could mean a smoother trade flow between both the regions. A more rational and eased trade policy could improve political as well as trade ties between the US and the EU.

Under the new presidency, new trade opportunities are expected to arise, even if they are not at par with the free-trade policies preferred by the EU. This would mean that the tariffs implemented under the umbrella of a ‘national security threat’ can be expected to be removed.

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Exports Hit Hard by US-EU Protectionist Policies

The spat between the US and the EU has been going on since 2006. The US imposed duties of $7.5 billion on EU imports. These taxes came after the Airbus-Boeing feud. The tariffs on Airbus were implemented under the pretext that they were being given unfair subsidies by the European Union. This decision was taken under the governance of the WTO.

This was followed by the EU retaliating by imposing tariffs on US goods worth $4 billion for providing illegal subsidies to Boeing. Another major setback was the EU tariffs on US iron and steel which also came in retaliation to the US-imposed tariffs on EU imports of iron and steel.

Heavy taxing has also been done by the US on imports of wine from the EU. The industry believed that Donald Trump alone was to blame for this.

However, it is important to note that this tumultuous relationship has been the same since 2006, long before Donald Trump came to power. But it can be argued that constant threats towards the EU and identifying them as a “foe” to the United States has worsened the ties between EU and US.

Biden Win Might Change the Trade Ties

It was expected that further trade tariffs would be implemented if Donald Trump continued to remain in power. Now, Joe Biden’s win would drastically improve the scenario for EU exports. However, it would not be the end of the Airbus-Boeing war.

It is also expected that the current US president might adopt policies that favor domestic producers, even if these policies are not as protectionist as those implemented by Donald Trump. The policies slated to be implemented under the Biden administration, would include the “Made in America” scheme. This is one of the major agendas featuring in his campaign.

There is also an expectation that the Biden regime would focus more on Paris and Berlin when it comes to the transatlantic relationships. Both representatives from US and EU would have to repair the political ties between the two regions. There was no effort to improve upon these ties under the Trump regime.

Possible Grounds for A Disagreement

It is expected that the UK would want to tie up with the Biden government to act as a negotiator between US and other countries, including China. UK’s

However, this may not go down well with the Biden government because the sour ties between China and the US have been going on for quite some time. This would have seemed impossible under the governance of Trump; however, people are slightly more hopeful about the same under the current US government.

Under the restrictions of the pandemic, most governments have maintained the protection of domestic firms as their utmost priority. The US government would want to do the same, more than they would want to harbor ties with other countries. Therefore, it is highly likely that the improvement in trade ties between the US and UK might take some time.

ALSO READ: China's October 2020 CPI growth rate falls to 11-year low, PPI drops for ninth straight month

What Does it Mean for Global Trade Ties of the Us?

Under the claims of human rights abuse, China might face actions by the Biden government that are even more stringent than those of the Trump government. Thus, it is highly improbable that the Biden government would work towards coming to mutual grounds with China. This might hamper the ties between EU and US which are yet to get resolved in the first place.

The trade war between the US and EU is unlikely to subside overnight even under the Biden government. Both have refused to step away from trade restrictions implemented against the other. Be it the Boeing-Airbus subsidy argument or the current tax by EU on tech giants based out of the US.

However, there is hope under the Biden regime, that at least a debate of such kind would be taken up, unlike the previous government. This could mean better days are ahead for both the countries. Fighting with a global pandemic would seem a lot easier if there are no blows to an economy from the outside. Thus, the Biden government should prioritize domestic growth, but at the same time, should consider harboring global ties instead of unabashedly launching import tariffs one after the other.