By Jacob M. Schlesinger in Washington and Bojan Pancevski in Berlin
When German Chancellor Angela Merkel visited Donald Trump
shortly after he took office, the new U.S. president opened the
meeting by telling her, "Angela, you owe me one trillion
dollars."
It was his estimate of a 14-year gap between what Germany spent
on its own defense and what it had promised to spend under
arrangements with the North Atlantic Treaty Organization, according
to an official briefed on the session.
Now, as NATO leaders prepare for a summit this week, Mr. Trump's
European counterparts are girding for a meeting with a U.S.
president who is taking aim at elements of the trans-Atlantic
alliance he insists place unfair burdens on the U.S.
Since the post-World-War-II era the alliance has entwined
security, through NATO, and the economy, through trade pacts. Mr.
Trump has invoked a Cold War-era U.S. law to brand some imports
from Europe as a threat to American security, the first time the
law had been invoked against U.S. allies. Using that justification,
he has placed tariffs on European steel and aluminum and threatened
more against cars. The moves sparked European retaliation against
U.S. industries.
The president also says the security umbrella the U.S. spread
across Europe during the Cold War allows allies to benefit without
paying their full share as set by NATO goals.
"I'm going to tell NATO, you got to start paying your bills,"
Mr. Trump said at a rally in Great Falls, Mont., Thursday evening.
"The United States is not going to take care of everything."
At a meeting in Quebec last month, Mr. Trump jousted with
European leaders not only on trade but also on immigration, Russian
relations, terrorism and other matters, and then walked away from a
joint statement prepared by the group. European officials worry
about a new round of discord at the NATO summit that opens on
Wednesday in Brussels.
The postwar order has been jolted many times before, over
security and economics. Lyndon Johnson placed tariffs on Volkswagen
pickups, retaliating for European curbs on U.S. chicken. France
left NATO in 1966. George W. Bush drew Continental condemnation for
his own steel tariffs and the Iraq invasion. Barack Obama
criticized NATO allies over their military budgets.
But many Europeans fear a deeper split this time because no
previous American president has so openly questioned the
trans-Atlantic alliance's value.
White House spokeswoman Lindsay Walters said administration
officials have been in regular contact with European allies and are
"working together to improve policies and resolve discrepancies to
ensure that all Americans have access free, fair and reciprocal
trade."
Uncertainty about Washington's commitment is prodding Europeans
to spend more on their military and to hash out market-opening
concessions. It is also emboldening opponents of European unity
inside the Continent and on its borders, while prompting the
region's leaders to look for alternative markets and allies.
Donald Trump "should not be underestimated," European Council
President Donald Tusk told European heads of government at a
gathering last month. "He is systematic, consistent and has a
method to undermine what the European values are in respect to
trans-Atlantic relations," Mr. Tusk said, according to people who
attended. Mr. Tusk is a former Polish prime minister whose own
government has been more supportive of Mr. Trump than others in the
region.
Many European leaders received letters in June, on White House
stationery and bearing Mr. Trump's signature, telling them of the
president's "growing frustration" with their military spending
levels and his expectation they redouble efforts when they next
meet.
His plans to follow the NATO meetings with a private sit-down
with Russia's Vladimir Putin, the alliance's biggest foe, stoked
fears among European leaders that Mr. Trump may make concessions to
the Russian leader.
"The U.S. is now being viewed in Europe as evolving from a
strategic partner to a strategic problem," said Dan Price, a
free-trade supporter who ran international economic policy in the
George W. Bush White House and now runs a consulting firm advising
multinational companies. For the whole postwar era, "Europe trusted
that the U.S. would defend its interests and values. That
fundamental trust is regrettably eroding."
Trump officials say the hand-wringing is overdone, and the
president, for all his rough language, has done more to support
Europe than his predecessor did. The Obama administration, despite
soothing words, "went for its first six years in office with an
approach to Europe that systematically disengaged -- we withdrew
the last U.S. tanks from Europe, we pivoted to Asia, we reset
relations with Russia," said A. Wess Mitchell, the State
Department's top official for trans-Atlantic affairs.
The Trump administration has sought to expand a U.S. government
program aiding Eastern European countries resisting Russia, has
encouraged NATO membership for former Soviet states Ukraine and
Georgia, and is building a new NATO command center. "Judge us by
our actions," Mr. Mitchell said.
Trump advisers say the president is willing to apply an
unusually high level of pressure on allies -- and in the process
convey ambiguity about how far the U.S. will go -- to rebalance the
economic relationship. "Our job is to reassure Europeans, but I
think first and foremost it's to make sure that Americans remain
stakeholders" in the alliance, Mr. Mitchell said.
Or, as one person familiar with administration deliberations put
it: "Uncertainty is better than a one-sided guarantee." When
Europeans worry more about the American commitment, "you're more
likely to get a result. That's the art of the deal."
Over the course of Mr. Trump's term, he has rankled Europe on
many issues, from abandoning the Paris climate and Iran nuclear
deals to indicating initial ambivalence about NATO's self-defense
mission. The trade spats in particular have stoked Europe's
concerns about relations with this administration.
Europeans are frustrated by uncertainty about how its decisions
are made. Confusion surfaced around Mr. Trump's March 1
announcement of the metals tariffs. Allies were invited to
negotiate exemptions, and they initially did so with U.S. Trade
Rep. Robert Lighthizer, during a Brussels meeting on March 10. EU
Trade Commissioner Cecilia Malmstrom then flew to Washington for
meetings and found the administration had since put Commerce
Secretary Wilbur Ross in charge.
Europeans say Mr. Trump's understanding of trans-Atlantic
economic relations is based on an incomplete and distorted use of
the data. They complain his assertion that Europe has a $151
billion trade surplus with the U.S. counts only goods, ignoring,
among other things, his own government's estimate of a U.S. $51
billion surplus in services.
They proposed in Quebec a joint study of facts and figures, to
try to show Mr. Trump that his assumptions are mistaken and to
establish common ground. That has further irked Washington. "The
whole European strategy is to have endless commissions and
discussions, without coming to grips with reality," said Mr. Ross.
"We don't need a hundred more. What we need is action."
The sides are also locked in a stalemate over tactics. The EU
has said it won't negotiate any trade concessions with U.S. until
Mr. Trump promises to remove the metals tariffs and take away the
threat of further penalties. The U.S. refuses to give away the
leverage of existing and threatened tariffs without European
action.
That impasse has persisted through more than a dozen rounds of
talks between Ms. Malmstrom and Mr. Ross in person, on the phone or
via videoconference from March to June. Ms. Malmstrom repeatedly
hinted at concessions Europe could make -- on accepting U.S. limits
on European steel exports, and on acceding to Mr. Trump's demands
of lower car tariffs -- if the U.S. took away the threat, according
to European officials. Mr. Ross said Europe had to take the first
step, and that the promises were too vague. Ms. Malmstrom "made
clear that she had no mandate," he said.
The Europeans retaliated against the U.S. metals tariffs in late
June by imposing tariffs on more than $3 billion worth of U.S.
goods. The U.S. is now threatening tariffs on car imports.
A core U.S. strategy is to find and expand cracks in European
unity, and play countries off against each other. The way one U.S.
official put it is, "Trump wants to...smoke everyone out and see
what the real red lines are."
At the White House in April, Mr. Trump suggested to visiting
French President Emmanuel Macron that France leave the EU, after
which the U.S. would offer France its own trade agreement,
according to European officials.
Four days later, Mr. Trump told a visiting Ms. Merkel, "Angela,
you are the president of Europe, you need to get the Europeans to
do a deal. These other countries will come to your doorstep if you
negotiate something between us," according to an official in the
room. She demurred.
The White House spokeswoman said the president "wants a better
deal. If he can't get it done through the EU then we can do
individual deals."
Pessimists worry Mr. Trump's high-pressure negotiating strategy
poses the risk of a miscalculation and a full-blown trans-Atlantic
trade war disrupting global commerce, or of further moves by Mr.
Putin to destabilize Europe.
There are optimists on both sides of the Atlantic who believe
the parties can reach amicable deals on trade and defense spending.
On NATO burden sharing, in "the last year and a half, the number of
European countries who have stepped up, the number spending 2% [of
GDP] or committing to spending 2% by 2024, has tripled," said Mr.
Mitchell.
On trade, optimists note that Europe has started to float
concessions and Mr. Juncker plans a July 25 meeting with Mr. Trump
to discuss their disagreements. In addition to suggesting a
possible reduction in auto tariffs, the Europeans have started
discussions on ramping up purchases of U.S. natural gas, a priority
export for Mr. Trump.
In his April White House meeting with Ms. Merkel, Mr. Trump told
her: "Angela, you need to stop buying gas from Putin," according to
the official in attendance, a reference to a natural-gas pipeline
between Russia and Germany.
Ms. Merkel said she would like to diversify gas purchases and
promised to persuade her EU partners to make that part of any trade
deliberations, the official said. EU leaders have since agreed to
try to find ways to cooperate with the U.S. on energy, hinting at
the possibility of facilitating more U.S. liquefied natural gas
sales on the Continent.
"We're going to go through some bumps in the road, but the
target is elimination of tariffs or other barriers," said Mr. Ross.
"The net effect will be much more freedom and more global
trade."
--Emre Peker, Valentina Pop and Vivian Salama contributed to
this article.
Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com
(END) Dow Jones Newswires
July 08, 2018 16:16 ET (20:16 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.