Are there challenging times ahead for relations between the United States and the European Union (EU) as President-elect Donald Trump approaches? Some signs point to this. Trump's campaign promises of up to 20 percent tariffs on all U.S. imports have raised concerns and calls for action in the EU, where wounds from the 2018 trade dispute over steel and aluminum imports still hurt. The EU leadership has already stated that it wants to work with Trump, but is also said to have drawn up possible lines of retaliation in the event of new tariffs. As for Russia, the EU establishment spent the fall worrying about then-candidate Trump's declaration that he would end the war in Ukraine within “twenty-four hours.” Trump has expressed skepticism about U.S. support for Ukraine, and Europeans are wondering what a negotiated settlement might mean for Russia's future war goals.
From a European perspective, these are legitimate reasons for concern. But the United States and the EU need each other now more than ever, especially in the area of technology cooperation, where neither party can achieve their respective geopolitical goals without a strong partnership. Recognizing this mutual need was the catalyst for the Biden administration to establish the Trade and Technology Council (TTC) – a formal policy-level dialogue on technology issues with US and EU leaders – early in its term.
Regardless of whether Trump ultimately decides to continue the TTC, revise it, or scrap the framework entirely, the format of technology cooperation is less important than the cooperation itself. Continued cooperation between the two economies is due to a combination of competition from non-market economies and lack of capacity in three key geostrategic areas of paramount importance: telecommunications, semiconductor manufacturing, and critical minerals and raw materials. These areas are the building blocks of many products and services that the United States and EU countries use in various sectors, including critical infrastructure operations, medical device manufacturing, and numerous military applications. Therefore, leadership in these sectors will determine geopolitical outcomes for the next generation.
In telecommunications, U.S. policymakers on both sides of the aisle understand the need to keep the global Internet and Western networks free from Chinese surveillance and influence. After the US imposed bans on China-based telecommunications providers Huawei and ZTE, industry insiders and policymakers quickly realized that the alternatives were predominantly European in nature. This led to the Trump administration's first Clean Network Initiative, which would never have gotten off the ground without European cooperation and companies. Over the past four years, this dynamic has not changed significantly, suggesting that further transatlantic cooperation will be necessary.
When it comes to semiconductor production, neither the United States nor the EU alone is capable of replicating Taiwan's semiconductor production in the foreseeable future. Taiwanese companies produce more than 60 percent of the world's semiconductors and over 90 percent of the most advanced. As both economies tie public resources to local chip manufacturing, continued cooperation is needed to reduce foreign dependence on chip manufacturing and prevent unnecessary market distortions caused by zero-sum competition in chip manufacturing subsidies. The U.S. Department of Commerce has announced more than $30 billion in planned private sector investments under the CHIPS Act, which it estimates could create more than 115,000 new jobs. The EU's European Chips Act will provide for more than “43 billion euros in politically controlled investments by 2030”. While new subsidies may accelerate the onshoring trend, a complete lack of cooperation regarding the type of semiconductors produced and their intended end-use would be mutually destructive and is in the interests of neither the United States nor the EU.
Both the United States and the EU have long been dependent on China for key minerals and raw materials. Experts estimate that up to 98 percent of the critical minerals used by the EU come directly from China, while in the USA the figure is almost 60 percent. This over-dependence is due to a number of local factors such as: B. Mining and refining capacity, legal barriers to mining and poor returns. Both governments have recently begun to reduce risk by shifting trade to Africa. As part of the Group of Seven (G7) Partnership for Global Infrastructure and Investment, an agreement was reached in 2023 with the governments of Angola, Zambia and the Democratic Republic of Congo for further development of the Lobito Corridor and investment in local infrastructure in exchange for access to important resources. If this investment comes to fruition, it could go a long way toward reducing both the United States and the EU's current dependence on China for critical minerals and raw materials, while providing an attractive alternative financing model to China's Belt and Road Initiative .
In the coming months, the United States and the EU must balance their mutual interests in strengthening technological cooperation and cooperation in competition with non-market economies. However, for this to happen, the EU must give the Trump administration flexibility and space as it sets its first priorities. The EU must recognize different transatlantic views in areas such as sustainability and green technology while negotiating hard on trade to show that mutually assured destruction benefits neither party. A cooperative tone coupled with skillful negotiations may well prevent the possibility of blanket US tariffs against the EU. Such an outcome is in the strategic interest of both the United States and the EU so that they can focus their attention where it is needed most.
Trevor Rudolph is vice president of global digital policy and regulation at Schneider Electric, where he leads the company's technology policy and regulatory strategy in North America, Europe and Asia. His views are his own and do not necessarily reflect the views of his employer.
Further reading
Image: U.S. and European Union flags are pictured during Vice President Mike Pence's visit to the European Commission headquarters in Brussels, Belgium, February 20, 2017. REUTERS/Francois Lenoir.