Reference News Network July 10 report: Germany's "Handelsblatt" website published an article titled "Trump's Trade Policy Is Capricious, Europe Is at His Mercy" on July 7, authored by Jens Münch. The article is excerpted as follows:

This time, Trump showed mercy and extended the "reciprocal tariff" grace period until early August. At first glance, this seems to be a relief, but upon closer consideration, it may not necessarily be good news.

Postponing means another three weeks of uncertainty, which could paralyze businesses, hinder investments, and cause unease among financial market participants.

The subsequent negotiations will not be easier either. The EU's position is quite disadvantageous. On one hand, since the passage of the "Big and Beautiful Act," Trump's desire for power has grown; on the other hand, Europeans continue to have differences in negotiation strategies and objectives.

Germany is striving for a quick agreement, especially for key industries such as automobiles and pharmaceuticals. France, however, warns that "dirty deals" would betray European interests and particularly wants to protect domestic agriculture.

Like Germany, European Commission President Ursula von der Leyen also hopes to quickly reach a framework agreement to freeze tariffs at 10%. After that, she intends to continue negotiating contentious issues. Most importantly, the European Commission wants to maintain unity and distribute the burdens of the agreement as fairly as possible. But this is by no means easy.

Therefore, Trump can easily divide Europe. He is a master of sowing discord.

Is there anyone who can take charge, represent the interests of all of Europe, and have the necessary authority? There isn't. The European Commission is clearly trying to balance various interests, but the results are very limited. Everyone openly defends their own national interests, but ultimately, everyone becomes a loser.

The financial markets are now, and will remain, Europe's best, and only ally. Trump's reluctance to impose so-called "punitive reciprocal tariffs" is not because the EU's negotiation skills are particularly high, but because he fears a sharp drop in the dollar, U.S. bonds, and American stocks.

No one knows whether the pressure from the market will eventually stop Trump from taking radical actions against Europe — even Trump himself may not know.

At this moment, Trump is writing letters to trade partners, informing them of their performance and the punitive tariffs they may face. This is a very strong move, which will certainly be remembered by allies and competitors for a long time.

Because Trump can use the full strength of the United States, this method of talking individually with each country may yield results in the short term. For example, he has forced Canada to abandon its digital services tax and convinced the other members of the G7 to exempt American companies from a "15% minimum tax." He has also reached a non-binding agreement framework with the UK, allowing the U.S. to export agricultural and chemical products largely without restrictions.

Vietnam had to sign an agreement to exempt U.S. goods from tariffs, while Vietnamese goods transported to the U.S. would need to pay a 20% tariff — provided that the components do not come from China.

This kind of agreement is not the foundation for healthy, long-term cooperation. The EU had better not sign such agreements, especially since they also violate the rules of the World Trade Organization (WTO).

The EU has nearly 450 million consumers, making it the world's largest single market, and possesses strong influence. Some of America's tech giants are in a monopolistic position in the EU market, and if the EU dares to regulate them strictly, they will be easily hit. Moreover, the U.S. needs to cooperate with Europe to contain China.

These are the positive aspects, which improve Europeans' negotiation position. The negative side is that Europe has a fatal dependence on the U.S. in security policy. Additionally, Trump has a deep dislike for the EU. In his view, the EU has always been an institution established at the expense of the U.S. This view may be wrong, but Trump does not accept arguments contradicting it.

Therefore, the only correct strategy can be to show willingness to cooperate with the U.S. without flattery. Most importantly, it is to promote itself as a reliable trading partner to other countries and regions, and to conclude as many trade agreements as possible that comply with WTO rules.

The EU cannot bypass the U.S. without violating WTO rules, as the latter is the world's most powerful economy. However, "de-risking" is no longer just about China, but also about the U.S., the EU's former value-based partner. (Translated by Zhong Sirui)

Original: https://www.toutiao.com/article/7525349811583730227/

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