Bad day at Brussels

“Bad Day at Black Rock” is perhaps one of the top five episodes of “Supernatural”, the show that has it all and yes, it’s probably named after the 50s movie. What episode 3 of season 3 has, however, is not all but mostly comedy, revolving around a magically charged rabbit’s foot. It’s not your average good luck charm. With this foot, the owner has more than just good luck. They have the best luck, all the time… until they lose the foot and, to quote a series favourite, “Everyone loses the foot!” Once you lose the foot, it being a cursed object and all, your luck doesn’t just turn. It turns fast and it turns hard, and within 24 hours of the loss, the former owner is dead.

I was reminded of that episode this week following what the U.S. president called “Liberation Day”, which, in the case of the EU is more of a Judgment Day after Europe for decades considered the U.S. its rabbit’s foot in many respects, from defence to trade, to ideological support. I did a short (paywalled) piece on what the EU might have to look forward to in the Age of Tariffs but I feel the topic deserves more. So, here’s more in summary: when it comes to trade and cooperation, it always comes down to who needs whom more.

Right now, the EU is acting as if the U.S. needs it more than vice versa. It’s charming, really, how Brussels Readies Robust Toolbox to Counter Imminent Trump Tariffs, the toolbox containing about three tools, among them U.S. sovereign debt holdings, which, I assume, will become a tool if they get put on sale, the EU regulatory machine that could turn on Big Tech, and, the deadliest weapon of them all, the anti-coercion instrument. Well, when I say deadly, I mean dead on arrival but anyway.

The ACI appears to be the home of all EU hopes and dreams for tariff retaliation, featuring in-kind tariffs (which the EU already has on U.S. products but anyway), export and import restrictions, and, my favourite, investment restrictions, as in, the EU can restrict U.S. investors from accessing the hallowed European markets. Now that the stage is set, let me share with you two recent headlines, both from Reuters.

Europe could need extra $11 billion of gas to refill winter stores, says the first headline and details a highly likely scenario of a gas storage refill season that features 250 additional cargos of LNG so Europe can be ready for next winter. It might be the size of that additional LNG demand that led to a sort of follow-up headline that said EU countries consider changing 2025 gas storage targets, sources say. Changing the targets will not change the demand, however. Only price will change the demand for gas in Europe as it already has, repeatedly.

While the EU ponders its gas storage targets, Investors pour record $11 billion into Europe ETFs to 'Make Europe Great Again'. The report is specifically about U.S. investors, meaning U.S. investors pouring money into the EU, at least EU-based ETFs, meaning, per the report, they are eager to profit from the EU’s stated deregulation drive and Germany’s debt brake revision because they believe, for some reason, that this debt brake revision will lead to a renaissance for Europe’s largest economy instead of delivering the fatal blow, which is what it actually will do.

Now, consider this. If the EU decides on imposing restrictions for U.S. investors, that $11 billion may be the last $11 billion European ETFs will see coming from across the Atlantic. And that’s just the ETFs and their managers. But what about the very people who are considering restrictions on U.S. investment in Europe? They have repeatedly and tiresomely stated that the EU needs all the investment it can attract for its Green Readiness 2030 Deal, which is how I’m going to call the twin suicide pacts of Brussels from now on to save space. There is no way in any of the nine realms of Norse mythology that this investment could come solely from within Europe itself — not with these gas prices.

Speaking of gas prices, the U.S. has been the preferred supplier of that same gas. The question of how exactly the EU is going to replace that supplier in short order begs to be asked. Qatar is not an option, not with the EU’s insistence on short-term deals, and not with its methane regulation, which Qatar has flatly refused to comply with. Russia is not an option for blatantly obvious reasons. This leaves Australia as the only top-three global LNG supplier. At a price. And within tight limits because Australia has good ongoing business with Asian buyers — and robust local demand.

So, Europe needs U.S. energy and money for its big energy and defence plans but Europe also needs to respond to U.S. tariffs and the only way to do that is, essentially, to threaten to cut off the access of U.S. energy and money to the EU market, or significantly reduce it, at any rate.

France’s president has called for a suspension of French investments in the U.S. because that would surely show the Americans who’s boss. The FT is reporting that Brussels is bracing for “a flood of Chinese goods” as if getting an alternative supply of necessary goods is a bad thing. Apparently it is, because the EU is preparing… tariffs for these goods to protect local producers in a move that for some inexplicable reason sounds very familiar but not at all identical to what Trump has just done to European goods. ING called the tariffs “Europe’s worst economic nightmare” come true. Everything is going swimmingly for the EU.

It’s still uncertain how long the tariffs will be around. Some say they’re just being used as a “blunt instrument” to renegotiate better trade terms for U.S. companies. Some are already singing dirges for the global economy. Whatever else happens, however, Trump and his tariffs have made one thing clear: the EU needs the U.S. far more than the U.S. needs the EU in the aspects that really matter, such as affordable energy from reliable suppliers and, well, big money. Who’s independent now, euro-bleaches?