With President-elect Donald Trump set to take office, are challenging times ahead for relations between the United States and European Union (EU)? Some signs indicate they are. Trump’s campaign promises of up to 20 percent tariffs on all US-bound imports have raised concern and action in the EU, where wounds are still raw over the 2018 trade skirmish over steel and aluminum imports. EU leadership has already stated that it wants to work with Trump, but it has also reportedly drawn up potential lines of retaliation in the event of new tariffs. On 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 demonstrated skepticism of US support for Ukraine and Europeans wonder what a negotiated settlement might mean for Russia’s future war aims.
From the European perspective, these are legitimate causes of concern. But the United States and EU need each other now more than ever, particularly in the field of technology cooperation, where neither party can achieve its respective geopolitical objectives without a strong partnership. Recognition of this mutual need was the catalyst for the Biden administration’s push early in its term for the Trade and Technology Council (TTC)—a political-level, formal dialogue on technology issues with leaders from the United States and EU.
Whether Trump will ultimately decide to continue the TTC, aim to revamp it, or scrap the framework entirely, the format of cooperation on technology is less important than the cooperation itself. Continued collaboration between the two economies is paramount due to a combination of competition from nonmarket economies and a lack of capacity in three key geostrategic areas: telecommunications, semiconductor manufacturing, and critical minerals and raw materials. These areas are the basic building blocks of many of the products and services the United States and EU nations use across a variety of sectors, including for the operation of critical infrastructure, the manufacturing of medical devices, and numerous military applications. Thus, leadership in these sectors will define geopolitical outcomes for the next generation.
In telecommunications, US policymakers on both sides of the aisle understand the need to keep the global internet and Western networks free of Chinese surveillance and influence. After the United States placed bans on China-based telecommunications providers Huawei and ZTE, industry insiders and policymakers quickly recognized that the alternatives were mostly European. This led to the first Trump administration’s Clean Network initiative, which would never have gotten off the ground without European cooperation and companies. Nothing in the last four years has significantly changed this dynamic, which would suggest further transatlantic cooperation will be needed.
On semiconductor manufacturing, neither the United States nor EU alone have the capacity to replicate Taiwan’s semiconductor output anytime soon. Taiwanese companies produce more than 60 percent of the world’s semiconductors and over 90 percent of the most advanced ones. With both economies tying public funds to local chip manufacturing, continued collaboration will be needed to reduce foreign dependence on chip manufacturing and prevent unnecessary market distortion from zero-sum competition on chip manufacturing subsidies. The US Commerce Department has announced over thirty billion dollars in proposed CHIPS Act private sector investments, which it estimates could create more than 115,000 new jobs. The EU’s European Chips Act will see more than “€43 billion of policy-driven investment until 2030.” Fresh subsidies may indeed accelerate on-shoring trends, but a complete lack of cooperation regarding the types of semiconductors manufactured and their intended end use would be mutually destructive and is not in the interest of either the United States or EU.
Both the United States and EU have longstanding dependencies on China for critical minerals and raw materials, as well. Experts estimate that as much as 98 percent of the critical minerals used by the EU come directly from China, and this figure stands at nearly 60 percent for the United States. This overreliance is due to a range of local factors, such as mining and refining capacity, legal barriers to mining, and poor rates of return. Both governments have recently begun to de-risk with a trade pivot to Africa. As part of the Group of Seven’s (G7) Partnership for Global Infrastructure and Investment, it reached a 2023 agreement with the governments of Angola, Zambia, and the Democratic Republic of the Congo on further development of the Lobito Corridor, investing in local infrastructure in exchange for access to key resources. If this investment materializes, it could go a long way toward addressing the current dependence both the United States and EU have on China for critical minerals and raw materials while demonstrating an attractive alternative funding model to China’s Belt and Road Initiative.
In the coming months, the United States and EU must align on their mutual interests in bolstering technology cooperation and working together to compete with nonmarket economies. For this to happen, however, the EU will need to give flexibility and space to the Trump administration as it establishes its initial priorities. The EU will have to acknowledge differing transatlantic views in areas such as sustainability and green technology while negotiating hard on trade to demonstrate that mutually assured destruction does not benefit either party. A cooperative tone coupled with adept negotiations may very well stave off the possibility of blanket US tariffs against the EU. Such an outcome is in the strategic interests of both the United States and EU so that they can focus their attention where it is needed most.
Trevor Rudolph is the vice president for global digital policy and regulation at Schneider Electric where he directs the corporation’s technology policy and regulatory affairs strategy in North America, Europe, and Asia. His views are his own and do not necessarily reflect the positions of his employer.
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Image: US and European Union flags are pictured during the visit of Vice President Mike Pence to the European Commission headquarters in Brussels, Belgium February 20, 2017. REUTERS/Francois Lenoir.
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