In the 2016 presidential race 84% of Americans identified the economy as a “very important” issue influencing their decision in the election. Many voters have high expectations for the economic policies of the new administration; they believe that Trump will get us better deals with foreign countries that have been taking advantage of the United States and, in the process, will bring jobs back to the US where they have been lost. Thus far the new administration has issued conflicting messaging on its expectations for foreign and trade policy in the transatlantic space. American euroskeptics are gleeful that their ideas finally carry weight in the White House. Unfortunately for the EU, the cumbersome and opaque nature of its structure is coming to heads with an administration that has so far been unwilling and uninterested in taking the time to understand the puzzle. The European Union has its flaws, but to disregard it is to disregard a market that as a bloc forms the United States’ largest economic partner, and together the US and EU account for approximately one third of global GDP.
Why view the European Union as a whole instead of as individual countries? Trump and his team have demonstrated their preference for bilateral trade deals, but when it comes to EU member states- 28 countries with more potentially on the way– individual nations have ceded control over trade deals to the European institutions. It isn’t possible to conduct substantive bilateral trade relations with EU member states. Even taking the example of the soon-to-be-Brexited United Kingdom doesn’t support this argument. UK officials are struggling to staff trade positions that were covered by Brussels for much of the last few decades, and before the UK is even legally allowed to turn towards a US-UK trade deal they have to formally leave the European Union. This behemoth of an exit deal from the EU- the UK’s largest trading partner- will take at least two years of negotiations, during which the United Kingdom will be unable to engage with new trade negotiations with the United States in any official capacity.
When companies, even foreign ones, bring jobs and investment into the US good things tend to follow. In Tennessee, where Volkswagen opened their North American manufacturing plant in 2011, VW has started a scholarship fund for local high school students to get vocational training. The economic benefit of America’s trade ties with other countries doesn’t come in large, neatly packaged new factories that make for a good visual. It is in a few hundred jobs here and there and in small and medium-sized companies that expand internationally where real benefit is generated, and the impact is even greater when you look at foreign direct investment’s impact on job creation. In general, areas that went heavily for Trump actually depend more on exports than other parts of the country, including many states in the rust belt. Traditional manufacturing jobs that have bled out of these regions probably won’t come back in their previous form, but there’s big opportunities there for jobs manufacturing more complicated products. A foreign company has more high-stakes impact in a small town where it may create the majority of jobs than it does as part of a greater ecosystem of commerce tied to a major metropolitan area, although foreign companies do play a significant role in many American cities.
While policy debates rage on in Washington, real life continues outside the beltway. For both American and European companies, this means huge flows of capital, goods and services across the Atlantic that fuels growth for both economies. If the White House wants to follow through on campaign promises regarding economic growth- which they seem committed to doing – working with the Europeans to ensure that America continues to benefit from trade and investment to and from Europe would be a prudent policy choice.