Putting aside widely reported interpersonal awkwardness, Chancellor Merkel’s meetings with President Trump on March 17 did not appear to make much progress on trade. The President’s comments referred to the continuing theme of trade deficits representing unfair trade deals. The Chancellor confirmed that any bilateral deals would be done with the European Commission, not member states. The Chancellor also hinted at a desire to restart negotiations on completing the Transatlantic Trade and Investment Partnership ( TTIP).

The lack of apparent progress would suggest that a deal between the U.S. and Europe is unlikely any time soon. If nothing else it is likely the administration would want to review TTIP from scratch.

The Trump administration’s initial focus is likely to be on renegotiating NAFTA, as discussed in Panjiva research of March 17. It will also want to resolve relations with China, though Secretary of State Tillerson’s meetings in China in the past few days suggest progress is unlikely to be made until President Xi and President Trump meet in April.

The European Union has Brexit to contend with alongside a slew of other bilateral deals such as with Japan. In the meantime the creation of a border-adjustable tax would be a potential hurdle to relations. That may prove to be more about competitive position than supply chain issues.

Panjiva’s analysis of the top 200 export lines between the EU and the U.S. (based on U.S. import and export data) shows there are 104 export lines where there is two-way trade. These are equivalent to 44.1% of bi-directional exports, and 47.8% of EU exports. A border-adjustable tax in the U.S. would make the U.S. products, particularly in capital equipment and electronics, significantly more competitive than they are now

Chart shows top 200 export lines from the European Union to the U.S. and vice versa as a proportion of total trade, listed by HS code.  Source: Panjiva