The deadlock in the US-EU trade negotiations: The epicenter of the storm in the business landscape

Recently, the trade negotiations between the United States and Europe have reached a deadlock, drawing intense attention from the global business community. As the two major economic powers in the world, the direction of their trade relations has a far-reaching impact on the global business landscape. The Trump administration pushed for a minimum tariff of 15% - 20% on all EU goods, far exceeding the previous benchmark of 10%, causing the US-EU trade negotiations to come to a standstill. The EU warned that it would take countermeasures. This deadlock is not only a clash of trade policies between the two sides, but also a crucial turning point in the global business landscape.

I. Root Cause of the Stalemate: Disputes over Interests and Policy Conflicts

The deadlock in the US-EU trade negotiations has persisted for a long time. The root cause lies in the significant differences in interests and conflicts in trade policies between the two sides. The United States has adopted a tough protectionist policy in trade, continuously imposing tariffs on EU goods, ranging from steel and aluminum products to automobiles, and even threatening to take action in areas such as pharmaceuticals and semiconductors. The aim of the United States is to reduce the trade deficit, promote domestic industrial development, and force the EU to open its market through tariff measures, so that American enterprises can obtain greater benefits.

The EU, on the other hand, adheres to the principle of free trade and insists on conducting negotiations on an equal and mutually beneficial basis. The EU hopes that the United States will abolish unreasonable tariffs and establish fair trade rules. The internal industrial structure of the EU is complex, and different member states have different interests and demands. When negotiating with the United States, it needs to take into account all parties and is difficult to easily make concessions to the unilateral demands of the United States. For example, in agricultural trade, the prices of American agricultural products are low and the production volume is large. Once a large amount enters the European market, it will have an impact on the local agriculture in the EU, which is unacceptable to the agricultural member states of the EU; in the digital services tax, the EU believes that American technology giants obtain a large amount of profits in Europe but pay insufficient taxes, and hopes to impose a digital services tax, while the United States regards this as unfair treatment of American enterprises, and the contradiction between the two sides is sharp.

II. Multiple Impacts on the Global Business Landscape

(1) The risk of supply chain disruption has intensified.

The United States and Europe are crucial components of the global supply chain. The deadlock in their trade negotiations has posed severe challenges to the global supply chain. Many enterprises, which originally established their supply chain systems based on the stable trade relations between the United States and Europe, now have to re-examine their strategies. The imposition of tariffs by the United States has led to a significant increase in the cost for EU products to enter the US market. To maintain their market share in the US, EU enterprises either have to bear the high tariff costs and reduce their profit margins, or raise product prices and lose their price competitiveness. This has forced enterprises to consider adjusting their supply chain layout. Similarly, the countermeasures taken by the EU have also put US enterprises in a difficult position in the European market. For instance, the automotive industry is an important sector for both the United States and Europe, and the supply chain involves numerous global component suppliers. Under the trade friction, the cost for US automakers to import components from the EU has risen, and the production and sales of EU automakers in the US have also been hindered. Enterprises may shift their supply chains from the US and Europe to other regions with more stable trade environments, which will lead to a reshuffling of the global automotive supply chain, increase enterprise costs and the complexity of the supply chain, and significantly raise the risk of supply chain disruption.

(2) Decline in business investment confidence

The uncertainty in trade negotiations has severely undermined the confidence of global business investors. When making business investment decisions, investors primarily consider the stability and predictability of the market. The deadlock in the US-EU trade negotiations has made the future market full of uncertainties, and enterprises are reluctant to expand their investment scale easily. European automotive giants such as Stellantis and Mercedes-Benz have all cancelled their performance forecasts for this year, and many car companies' expansion or investment projects have been put on hold. Andrew Adair, the North American trade advisor of the German Machinery Manufacturers' Association, said that due to the excessive policy uncertainties, the German industrial sector seems to be pressing the "pause button" on investment in the US. Similarly, American companies' investments in Europe also face many uncertainties. Projects originally planned to be carried out in Europe may be indefinitely postponed or cancelled due to trade frictions. This setback in investment confidence not only affects the economic development of the US and Europe themselves, but also has a negative impact on global economic growth, as investment is one of the important drivers of economic growth.

(3) Reconfiguration of Market Competition Landscape

The deadlock in the US-EU trade negotiations has provided new business opportunities for other economies and may reshape the global market competition landscape. On one hand, due to the obstruction of trade between the US and the EU, enterprises from both sides will look for new markets, which offers opportunities for emerging market countries and developing countries to attract investment and expand exports. For instance, some Southeast Asian countries might become the choice for US and EU enterprises to relocate their production bases. These countries can take this opportunity to enhance their industrial levels and strengthen their position in the global industrial chain. On the other hand, enterprises from other economies may also seize the market share of US and EU enterprises in their respective markets. During the US-EU trade disputes, automotive and electronic product enterprises from countries like Japan and South Korea might increase their efforts to enter the US and European markets, thereby changing the global competition landscape of related industries.

III. The Path to Breakthrough: Cooperation and negotiation are the key.

The deadlock in the US-EU trade negotiations has brought numerous negative effects on the global business situation, and it is urgent to seek a solution. From the perspective of both the US and the EU, both sides should abandon the mindset of trade protectionism and return to rational negotiations. The US should recognize that there are no true winners in a trade war, and long-term trade frictions will only damage the global business order and ultimately harm the economic interests of the US itself. The EU, while adhering to its principles, should also actively communicate with the US and seek a balance of interests for both sides. By establishing fair and transparent trade rules, reducing tariff barriers, promoting the liberalization and facilitation of trade and investment between both sides, and achieving mutual benefit and win-win results, it can be achieved.