AFP – Buffeted by tariffs and threats from Washington, the European Union (EU) and Canada discussed drawing closer together, the latest sign of a wider Brussels push to diversify trade away from the United States (US).
Canadian Prime Minister Justin Trudeau is to hold talks with top EU officials in the Belgian capital after US President Donald Trump imposed painful 25 per cent tariffs on steel and aluminium imports.
Speaking to AFP, Trudeau said Canada would “be working with our international partners and friends” as it weighs how to address Trump’s tariffs, promising a “firm and clear” response if need be.
Trudeau’s visit comes as the EU, faced with a rocky patch in relations with Washington, has moved to position itself as a reliable trade partner for other countries looking to do business.
“The situation is not going to get better,”international trade expert at Brussels think tank Bruegel Ignacio Garcia said of EU-US ties under Trump.
This leaves the EU “no other option” but to “invest in developing alternative markets”, he added.
The US accounts for around 20 per cent and 77 per cent of EU and Canadian exports respectively.
Trump has already signalled that additional tariffs on automobiles, pharmaceuticals and computer chips are coming, and has publicly mused about annexing Canada and Greenland, an autonomous Danish territory.
Bracing for a trade war, Brussels has been working to broaden its trade horizons since the Republican won back the White House in November.
In the wake of Trump’s re-election, the bloc has announced a strengthened trade deal with Mexico, the resumption of talks on a free trade deal with Malaysia, and a new agreement with the South American bloc Mercosur.
It also struck a more conciliatory note towards China, and said European Commission chief Ursula von der Leyen’s new top team will visit India in its first trip abroad.
On Monday, Antonio Costa, who heads the European Council representing the EU’s 27 member states, discussed deepening ties with South Africa, which is entangled in a spat of its own with Trump.
In a phone call with President Cyril Ramaphosa, Costa stressed Europe was a “reliable and predictable partner” – an implied juxtaposition to Trump’s volatility.
A day later he announced the “first-ever” EU-Central Asia summit for April after a call with Kazakhstan’s president.
As explained by a senior EU official last month, Brussels sees bolstering ties with other nations at the rough end of the US stick as common sense, and something to use as leverage with Washington.
“We can trade with the whole world. If you close your markets, we have other partners,” the official said. Canada already has a free-trade agreement with the EU, credited with boosting bilateral merchandise trade by 60 per cent since 2017.
The EU is now Canada’s second-largest export destination after the US, with bilateral trade worth CAD157.3 billion (USD106 billion) in 2023.
“But can we do even more?” Trudeau, who is to step down in March, asked a summit of business, labour and government leaders last week.
The answer is yes, according to European Centre for International Political Economy (ECIPE) think tank Philipp Lamprecht.
Some aluminium producers in Quebec, who ship 90 per cent of their output to the US, are looking eastwards to ease the tariff pain.
“We could shift some volumes towards the EU where there’s no tariffs and they are in need of metal,” President of the Aluminium Association of Canada Jean Simard told AFP.
There is also talk of reviving plans to build pipelines and terminals allowing oil and gas extracted in western Canada to be shipped eastwards without having to pass through the US.
But any such project would take years to complete.
A more immediate boon could come from fully implementing the Canada-EU deal (CETA), which is yet to be ratified by 10 European countries, including France, Italy and Poland.
This curtails its impact, stymies long-term investments, and sends a bad message to other potential trade suitors, Lamprecht said.
“If two trading partners such as the EU and Canada that are strong allies and very like-minded countries cannot manage to have cutting-edge, up-to-date, efficient and well-governed trade relations, then who can?” he said.
