Name: Trumps tariff threats: A dangerous downward spiral? | To the Point
Uploaded: 2026-01-22T16:57:00.000Z
Duration: 26 min 5 s
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Europe's allies are feeling the impact of President Donald Trump's growing global ambitions.

Adverbs of degree

Even after the latest agreements on Greenland and tariffs for Europe, open pressure from the very nation that has long been its main protector marks a historic breach of trust.

The EU tried to push back, countering with its owned trade bazooka.

But Europe's search for new trade partners isn't going smoothly either.

The Mercosur deal, celebrated just weeks ago, is now tied up in court after fierce resistance stalled for the foreseeable future.

So what are the right answers to Trump's strategy?

Or is Europe simply too weak and too dependent on the United States?

And to the Point, we ask tariffs as a weapon, who holds the better cards?

Ulrike Hermann is a business editor at Germany's daily Tatz here in Berlin and author of several books on economic topics.

Annika Miltner is an economist and the director of the Aspen Institute in Germany.

Before that, she oversaw international trade policy at the Federation of German Industries, the bdi.

Melissa Eddy is the Berlin correspondent for the New York Times, where she focuses primarily on economic, economic and business reporting.

And joining us from Kiel is Professor Rolf Langhammer.

He spent many years researching international trade and globalization at the Institute for the World Economy.

We just heard about this apparent deal between NATO and the US to put an end to tensions over Greenland.

At this point, there's a lot we don't know.

What we do know is that tariffs at the moment appear to be off the table.

Military intervention has been taken off the table, so it is a step down.

It looks like the United States could get some territorial independence of certain military bases in Greenland.

There's talk of it being similar to what we see in Cyprus, and

But there's a lot at this point that we don't know.

Bruno and the Europeans will be meeting tonight to discuss what they think their next best move is.

Donald Trump says consistently and constantly that America's allies need the US More than the US Needs them.

Do you think there's a limit, at least economically, to exert that Power.

I would say that there is an asymmetry in our relationship.

Europe certainly is very dependent on international trade.

Germany is extremely dependent with a trade to GDP ratio of around 90%.

So our export markets are extremely important to us.

We are also extremely invested in the United States.

Lots of German companies are producing in the United States.

Also the financial markets are interconnected.

So yes, I would say there's an interdependency, but

the dependency of Europe on the US Market is very high.

this also is one of the explanation why the EU agreed to a very asymmetric trade deal last summer.

And we should also always not forget our huge dependency still with regard to security issues on the, on the United States.

So whenever we talk about our trade bazooka, the anti coercion instrument or tariffs, this is, this also comes with costs for us because we are so dependent.

And that reduces a little bit our power in exerting, I mean, or threatening countermeasures.

Certainly that's what the euro countries or the European Union countries are still trying to do at least.

Ulrike, do you think this new development with the de escalation has anything to do with that threat by the European Union to impose the so called trade bazooka?

I think that this threat was not really important, but

it was also not non important because what somehow loomed at the horizon was a trade war.

And that is what the financial markets reacted to.

And for that reason the finance, the share value of the firms in the United States started to fall.

And that is something Trump reacted to immediately because he always watches Bloomberg's and once, you know, he sees the shares falling, he gets nervous.

So in a way, indirectly, I think that this looming trade war was very important for his decision to somehow back down.

Your institute has studied the impact of Trump's tariffs and concluded that they are mostly being paid by American consumers.

Do they really work then as a political instrument to exert pressure on other countries?

I think for the time being not because the American consumers and the American companies will see the long term effects of tariffs later, maybe even later this year.

So the Peterson Institute for International Economics, for instance, forecasts an inflation rate of about 4% by the end of this year.

We also of course have estimates from Yale University telling us that the normal U.S.

So it's a loss of real income in vist direction.

They charge the poorer more than the richer.

And that of course, is a major burden to the US Economy, not only in terms of competitiveness, but

But the effects will take some time to really come to the surface.

And we'll see when the US Consumers will of course see disappointed and maybe give Donald Trump a yellow or even a red card when it comes to be interim elections in November.

If I may, in there, what's interesting to see is if you look at polling data, then you can see tariffs are pretty unpopular among the Democratic voting base.

But they are still, there's still a lot of support among his own base, among the Republicans, surprisingly so, because that should be traditionally, historically the base being against protectionist measures.

But of course there has been a lot of movement in the basis of Republican, who votes for Republicans, who votes for Democrats.

We see that among Republicans there's a bigger support for protectionist measures.

It's still more than 70% of the Republican base who are for it.

As I said, Democrats are in their majority against it.

And what's really interesting is how the independents currently view the trade policies and protectionism.

And there we see that they become less popular.

And that's also an interesting, I mean, voting bloc for the upcoming midterm elections.

And I also think that apart from the financial markets that Trump also had a look at what's happening internally in the United States.

The Greenland issue was not very popular.

So I think that also motivated him to maybe he was losing some support within senators in his party and there was growing talk that Congress perhaps would actually take some action.

Also, I think it was very unpopular, or we've seen from polling, it was very unpopular, popular amongst most Americans, even amongst some in his MAGA base.

So the risks for him internally were extremely high.

Maybe he was listening, but we're not entirely sure.

Anyway, the tariffs feel like a punishment to other countries.

And the European Union certainly is also following the same strategy, preparing its own response.

Let's take a closer look at the tools the European Union has set to push back against pressure from President Donald Trump and what real leverage Europe can bring to the table when the transatlantic relationship gets tough.

Europe is the most important international market for US Tech giants like Google and Meta.

But these companies could be most heavily affected.

Along with online payment service PayPal, the EU has a so called anti coercion instrument at its disposal, what some refer to as a trade policy bazooka.

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Trumps tariff threats: A dangerous downward spiral? | To the Point

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