Ever since the European Single Market was built, Europe has been described as the ‘country’ rather than countries. The European Single Market (ESM) consists of a mixture of rules and coordinated policies that have been built for decades. European countries have endeavoured for better economics and internal security, and integrity as a result of this effort has brought enormous power and benefits (Marin, 2020). The EU and the US had connected each other in the name of ‘alliances’ since the collapse of the Iron Curtain. However, the Trump presidency has changed the atmosphere completely. The European intelligent have to ask themselves whether the alliance no longer exists or not, and if so, how should the EU react? What will be the impact on ESM?
Even though 70% of EU imports and exports emerge within Europe, the portion of the USA as a trade partner is still giant and undoubtedly essential; 7% of EU exports and 5% of EU imports. Despite the growing mistrust in EU-US relations, they cannot destroy what they have achieved so far. Instead, the current crisis warns the countries if they do not coordinate, they will face worse consequences. The problem is that if Trump succeeds in extending the presidency and if he continues to push the threat of automobile tariffs, the impact will be significant. For example, a BMW car that Germany exports contain the substantial extent of other EU member states’ value-added. In other words, it is not a German but ESM export (Braml & Felbermayr, 2018). Therefore, tariffs on auto will influence not only Germany but also all member-states included in the manufacturing industry.
Despite the benefits from the ESM, it is crucial to bear in mind the political and legal changes that have supported market consolidation (Egan, 2015). It means that the ESM has intertwined with extraordinarily complex rules and laws that cannot be altered by one simple finger snapping. If the EU admits the need to reform the organisations such as WTO and NATO as the Trump administration insists, the procedure that will follow must be meticulously structured in order to avoid any harms to the ESM.
Protectionism is likely to be growing in many political scenes. Some experts insist that the pandemic was inevitable, but it is also true that if EU member states were able to close the borders earlier, many who have died already could have been alive today. The free movement of people in this regard may be re-discussed as well. However, the protectionism in the 1970s caused by the oil crisis showed us how it hampered the free movement of goods and services (Egan, 2015).
The potential of the free movement of capital, however, should not be underestimated. The EU and US are still the most innovative markets, and hence FDI in-out flows will inevitably be focused on them despite the rise of Asia. In conclusion, the world has faced the biggest crisis ever than before, and its impact is still unpredictable. The only truth we can answer now is that the consequences will be much worse than what we assume. The level of uncertainty hits the sky, and the disputes among the world-leading countries have threatened the civilians. However, the world should keep in mind that any kind of trade wars did not end up with ‘positive’ results but leave deep scars.
References:
Braml, M. T., & Felbermayr, G. J. (2018). Trump Economics lesson. The International Economy, 32(3), 46–49.
Egan, M. (2015). Single Markets (First ed., OUP Catalogue). Oxford: Oup Oxford. doi: 10.1093/acprof:oso/9780199280506.001.0001
Marin, N. (2020). COVID Pandemic and its Influence as Fragmentation of EU Market and Security, International conference KNOWLEDGE-BASED ORGANISATION, 26(2), 193–198. doi: 10.2478/kbo-2020–0075