Today's BIPR seminar featured Johns Hopkins SAIS Europe professor Michael Plummer and Nathalie Tocci from the Istituto Affari Internazionali discussing the implications for the transatlantic relationship of U.S. President Donald Trump's "Liberation Day", a sweeping and massive hike in tariffs against most countries and territories aimed to correct trade imbalances, finance tax cuts, and reshape or even leave the current U.S.-led global order. Plummer began by outlining the broader historical context: although the U.S. helped construct a global economic system that lifted over 1.5 billion people out of poverty, it has never fully embraced free trade itself. U.S. trade policy has long harbored protectionist tendencies, with recent years seeing an intensification under both Trump and Biden. This culminated in "Liberation Day," a moment marking the U.S.'s dramatic shift away from the international trade norms it helped establish, including the imposition of so-called reciprocal tariffs on countries with which it has existing free trade agreements.

Plummer identified three key concerns for the transatlantic relationship. First, the tariff regime undermines the vast $4 trillion transatlantic investment landscape and threatens Europe's economic growth prospects. Second, it impedes shared climate goals and multilateral commitments, with the U.S. pulling out of the Paris Agreement for a second time. Third, the retreat of the U.S. from global development partnerships, including the weakening of USAID, is especially damaging. Tariff increases of 45-50% on low- and middle-income countries like Vietnam and Laos risk pushing them closer to China, eroding U.S. influence in key regions.

Tocci offered a more politically-focused interpretation, expressing deep concern over the unraveling of the liberal international order. She described the U.S.'s tariff hikes, from an average of 3.7% to over 20%, as not merely economic shifts but systemic ruptures. Tocci challenged the rationalizations for these tariffs, dismissing them as post-hoc justifications for irrational policies driven by loyalty to the president rather than coherent strategy. Three dominant justifications for the tariffs were dissected: as a negotiation tool, as a method for reindustrialization, and as a revenue-raising mechanism. Tocci argued that these explanations contradict one another and fail to explain the broader incoherence. The U.S. cannot apply and remove tariffs for negotiation purposes on a whim without compromising reindustrialization efforts or additional revenue to offset tax cuts. Another key concern is the unpredictable nature of these tariffs, especially the seemingly arbitrary formula tying them to constantly-changing trade deficits and imports, which disproportionately harms poorer countries while sparing sanctioned regimes like Russia and North Korea.

Retaliation from the EU is seen as inevitable. While some member states may favor a tough response, others may seek a more cautious approach. Tocci noted that this moment could mark a psychological turning point for Europe, a realization that it is being bullied and must push back. This may lead to diversification in EU trade policy, including new agreements with Mercosur, Mexico, India, Indonesia, or other actors. Despite the challenges, Tocci ended on a hopeful note. Eurobarometer data showing record-high support for the EU suggests European unity may strengthen in response to U.S. aggression. Citing leaders like Macron, Zelenskyy, and Starmer who have stood firm, she emphasized the importance of European resolve in defending its interests and values in a shifting global landscape.

Transatlantic Politics and Policy after the Election Year Series

hosted by Professor Renaud Dehousse


Transatlantic Politics and Policy after the Election Year - A series of talks @SAIS Europe

Politics and policy in the transatlantic space are deeply intertwined. Crucial elections held in 2024 in Europe and the United States are destined to shape politics and policy on the two shores of the Atlantic for years to come. This cycle of events held at SAIS Europe in the academic year 2024-25 will explore the major political and policy implications of this electoral phase, and in particular its repercussions on Europe and on the transatlantic relationship.

The Transatlantic Relationship and Geoeconomics

The US President has unleashed a trade war onto the world. With sweeping 20% tariffs on all EU imports, alongside recently imposed ones on steel, aluminium and cars, the EU is amongst the main targets of Trump's "liberation day". The EU will respond through retaliation towards the US and diversification of its trade and economic ties with Latin America, India, Africa, and perhaps China too. The fourth meeting in our series will assess the geoeconomics and geopolitical implications of the transatlantic trade war in the offing.

SHAHIN VALLÉE

Shahin Vallée is Senior Research Fellow at the Center for Geopolitics, Geoeconomics, and Technology of the German Council on Foreign Relations. Prior to that, he was a senior fellow in DGAP's Alfred von Oppenheim Center for the Future of Europe. Vallée was a senior economist for Soros Fund Management until June 2018, where he worked on a wide range of political and economic issues. He also served as a personal advisor to George Soros. Prior to that, he was the economic advisor to Emmanuel Macron at the French Ministry for the Economy and Finance, where he focused on European economic affairs. Between 2012 and 2014, Vallée was the economic advisor to the President of the European Council Herman Van Rompuy. This experience put him at the heart of European economic policy discussions since 2012, in particular on issues related to the euro area and international policy coordination (IMF, G20). Having started his career working for social investment vehicles and entrepreneurship in Africa, he has also worked as a visiting fellow at Bruegel, a Brussels-based economic think tank, and as an economist for a global investment bank in London. Vallée is currently completing a PhD in political economy at the London School of Economics and Political Science. He holds a master's degree from Columbia University in New York, a degree in public affairs from Sciences Po in Paris, and an undergraduate degree in econometrics from the Sorbonne.

NATHALIE TOCCI

Nathalie Tocci is Director of the Istituto Affari Internazionali, Adjunct Professor at the School of Transnational Governance (European University Institute), Honorary Professor at the University of Tübingen, independent and non-executive board member of the energy company Eni and Europe's Futures fellow at the Institute for Human Sciences (Institut für die Wissenschaften vom Menschen, IWM). She has been Special Advisor to EU High Representatives Federica Mogherini and Josep Borrell. In that capacity, she wrote the European Global Strategy and worked on its implementation. Tocci has been Pierre Keller Visiting Professor at the Harvard Kennedy School and, prior to joining Eni, was an independent board member of Edison. She has held research positions at the Centre for European Policy Studies, Brussels, the Transatlantic Academy, Washington, the European University Institute, Florence, and has taught at the College of Europe, Bruges. Her research interests include European integration and European foreign policy, the Middle East, Eastern Europe, transatlantic relations, multilateralism, conflict resolution, energy, climate and defence. Tocci is a columnist for Politico and La Stampa.

MICHAEL G. PLUMMER

Michael Plummer is the Eni Professor of International Economics and Professor of International Economics since 2001. He was Director of SAIS Europe from 2014 to 2023. Professor Plummer was Head of the Development Division of the Organization for Economic Co-operation and Development (OECD) in Paris from 2010 to 2012; an associate professor at Brandeis University (1992-2001); and Fellow at the East-West Center (1988-1992). From 2007 to 2015 he was Editor-in-Chief of the Journal of Asian Economics (Elsevier) and president of the American Committee on Asian Economic Studies (ACAES) from 2008 to 2015. A former Fulbright Chair in Economics and Pew Fellow in International Affairs at Harvard University, he has been an Asian Development Bank (ADB) distinguished lecturer on several occasions and team leader of projects for various organizations including the Association of Southeast Asian Nations, the United Nations, the OECD, the ADB, the World Bank, the IMF, and the World Trade Organization. He has taught at more than a dozen universities in Asia, Europe, and North America. Professor Plummer has advised several governments on the Transpacific Partnership (TPP) negotiations and ASEAN governments of economic integration issues and was a member of the Trade Policy Modelling Review Expert Panel of the UK government (2020-2022). He is a member of the editorial boards of the Asian Economic Journal, the Journal of Southeast Asian Economics (formerly ASEAN Economic Bulletin); and the Global Economic Journal. Professor Plummer is author/co-author of over 100 journal articles and book chapters and co-author/editor of 28 books. His PhD is in economics from Michigan State University.