Trump’s tariff war is imminent, Macron and Draghi warn Europe

PARIS — Mario Draghi and Emmanuel Macron delivered a sharp wake-up call to Brussels on Wednesday, insisting Europe needed to prepare fast for the impending second round of a trade war with Donald Trump.

In an hour-long conversation at the prestigious Collège de France in Paris, the Italian former chief of the European Central Bank and the French president urged the EU to stand on its own two feet to avoid being a collateral victim of a trade war between the U.S. and China that looks liable to explode in the coming months.

Trump is pledging to bring down America’s yawning deficits by slapping duties of 10 percent to 20 percent on all imports, and of 60 percent on those from China. It’s a recipe that risks triggering even greater trade chaos than the tariff wars against China and the EU that shaped his first presidency.

“We are very clearly entering a world of tariff wars,” Macron said, warning that Europe still needs to figure out “how we will be caught in the trade war” between the U.S. and China.

The French president said Trump could be out to “force the Europeans to separate faster from China” by threatening duties against Europe if it keeps trading with Beijing. That risks deepening divisions among EU countries that have closer commercial ties with China and those closer to Washington, he added.

Macron’s comments echoed an earlier warning by Draghi. “With a tariff wall … if you are a friend, you are in. If you are not a friend, you are out. And I am going to judge you on whether you want to be a friend,” the former Italian prime minister said, explaining that Trump will pressure Europe to pick a side between the U.S. and China, and that in any case “there will be more tariffs.”

Trade experts and other observers are split over whether the U.S. intends to play a game of divide-and-conquer by using tariff threats to extract concessions, or whether the new president is actually committing to a far deeper program of economic isolationism through universal tariffs to protect American jobs. A big role for former U.S. Trade Representative Robert Lighthizer is seen as likely to suggest the latter.

Draghi, who in September delivered his recommendations on how to save the European economy from a slow decline, called Trump’s election “a wake-up call” and said that Europe must now “work more intensively than we might have planned to do before.”

Trump’s victory has disquieted EU capitals, with Brussels bracing to hit back fast and hard against the U.S. president-elect’s tariffs.

The Trump administration “will continue to protect [its interests] at the risk of dismantling value chains between Europeans and Americans,” Macron warned, while urging Brussels to take action with a more aggressive trade policy of its own, building on the example of recent EU tariffs on Chinese electric vehicles.

“Trump’s election is a moment of acceleration. The longer we wait, the more we will face dilemmas that are impossible to solve,” he warned.

Speaking at the storied college, which was founded in 1530 by King François I, the Franco-Italian duo lost no opportunity to flaunt their friendship, with Macron publicly celebrating Draghi’s leadership and the two delivering carefully aligned messages on what Europe should do.

In particular, they both criticized the EU’s current economic doctrine, saying leaders should find the courage to invest more in strategic sectors and to create a real capital markets union to fund disruptive technologies.

While criticizing U.S. protectionism, the two repeatedly compared Europe to the U.S. and urged Brussels to take inspiration from Washington, especially on directing private capital toward strategic sectors. Europe should catch up with the U.S. by boosting funding for innovative companies via capital markets instead of bank loans, they said.

“Banks are not good at all at financing innovation,” as Draghi put it.

While deploring EU red tape, a stance that previously earned him the praise of U.S. billionaire Elon Musk, Draghi said Brussels should “get rid of [the] useless regulation” that is pushing companies, especially in the tech sector, to quit Europe.