US tariff threat | Stay calm

US President Donald Trump is doing what, in his highly limited worldview, he considers the most promising path to victory: remaining unpredictable and threatening. With the announcement that, effective August 1, he will impose a base tariff of 30 percent on goods from the EU—those not already subject to additional tariffs, such as steel and aluminum—he is barging into the ongoing negotiations with the Europeans, clearly with the goal of spreading fear and terror, possibly sowing discord among the EU states, and escalating the situation in his favor. This is nothing new, neither in the trade dispute instigated by Trump with virtually the rest of the world nor in other conflicts he has forced.

The fact that the EU Commission, despite the threats, initially intends to continue negotiations until the deadline and has even postponed its planned counter-reaction to the US punitive tariffs that have already come into effect, is, at best, evidence of a successful learning process: Whatever Trump does, just don't panic. And: rely on your own strengths – negotiate, in other words.

In Trump's timeline of about-faces, August 1st is still an eternity away, which at least offers the possibility of a negotiated solution, which would be entirely preferable to escalation. With countermeasures that signal to Trump that, despite its willingness to negotiate, Europe is by no means a victim, the EU can still react early enough. They are prepared, more are likely in the works, and given the EU's market power, they are unlikely to remain ineffective. Contrary to what Trump might believe, his actions are not risk-free. If his voters, his supporters in the US economy, and the financial markets feel the effects, the Trump world may look very different again.