As Juncker meets with Trump, remember Europe needs America more than America needs Europe

All the world’s a stage, and the latest scene in Washington of the long-running global trade war reality show features two seasoned players.

Donald Trump plays the blunt, aggressive champion of US business, even if many US companies fear their bottom line will be damaged by his actions. Jean-Claude Juncker plays the wily, resolute protector of European enterprise, even if many businesses on the continent wish the EU would come to a speedy deal with the US. Each man plays his part.

Such is the theatre element that there is a temptation to see whatever happens in Washington as one of the key scenes of the drama. It will be important, of course, but almost certainly not lastingly so. Right now it is pretty clear that trade tensions are damaging the world economy – look at the share price of German auto companies. But it is quite possible that by unlocking trade restrictions between the US and the EU, these talks will set transatlantic trade onto a course that will benefit both sides in the years ahead.

Be clear, however, where the advantage lies. On balance, Europe needs America more than America needs Europe.

If that seems strange, look at the numbers. Even without a trade deal, Germany exports more to the US than it does to any other country: $126bn last year, against $119bn to France, $98bn to China and $95bn to the UK. That league table, by the way, is interesting. After the UK leaves the EU, three out of Germany’s top four export markets will be outside the EU.

The US, by contrast, exports relatively little to the EU, and will do even less when the UK leaves. Top market last year was Canada with $282bn, followed by Mexico with $243bn, China with $130bn, Japan with $168bn, and number five, a long way behind, the UK with $56bn. The numbers make the point.

If Europe is potentially the bigger loser from trade tensions – though, to be clear, both sides lose – it should seek a deal. That is not going to happen in Washington, because that is not the way the world works. But I was intrigued by some comments yesterday by Gunther Oettinger, the EU’s budget commissioner. He said Europe would be ready to discuss mutual tariff cuts with the US across a range of products, provided Washington lifted the tariffs first.

“Firstly, our common line is that we expect the existing punitive tariffs to be lifted,” he said on German radio station Deutschlandfunk. “Then we are ready to discuss a reduction and restructuring of all tariffs in all sectors. In this way, we want to avoid a further escalation of the trade conflict, and to avoid a trade war. One could try to untangle the existing tariffs and then ... reduce tariffs for various goods and services.”

The negotiations could take six months, starting in the autumn, and the idea would be to negotiate a lighter version of the failed transatlantic trade and investment partnership, he suggested.

I have no idea whether this is really a runner. I suspect the US is not ready to think about any comprehensive trade deal with Europe and won’t be for a while; maybe not under this administration. Further, Oettinger is the budget commissioner, not the trade commissioner, and he may be freelancing here. He is a German CDU politician who has had something of a bumpy ride with the chancellor, Angela Merkel, and has a record of speaking a bit ahead of turn. But he knows Brussels backwards and he understands German self-interest, so the idea should be taken seriously.

For the rest of us, peering from the stalls at this trade war posturing, what really matters is not so much that there are no additional trade barriers, though they can do a lot of damage in the short run. Rather it is that the principle is re-established that freer trade benefits both sides. If trade barriers do damage, it is kind of obvious that this should be the case. Yet free trade has its enemies on both sides of the Atlantic.

A new transatlantic trade deal is not essential. Germany has managed fine without it, as indeed has the UK – the US is Britain’s biggest single export market too. Further, regional trade deals are a second best. Far better to have multilateral free trade. But in the absence of the latter, my hope is that these rows will unblock things. We can enjoy the theatre but we should focus on the reality: does Germany want to sell more Mercedes cars in America or fewer? Simple as that.