Transatlantic Economic Cooperation Faces Fresh Challenges

The recent speech by the Governor of the Bank of France highlights both the strength and fragility of the long-standing economic relationship between Europe and the United States, as geopolitical tensions and trade uncertainties test shared values.

Central to the address is a call for honesty and context in understanding the transatlantic partnership. The Governor refutes claims that the European Union was created to disadvantage the US, instead reminding audiences that the EU’s foundations were built on peace, democracy, and market principles—with strong US support. Emphasis is placed on the mutually beneficial and balanced trade and investment ties, noting that despite an EU surplus in goods, substantial US surpluses in services and investment income keep the overall economic relationship equitable. The vast scale of cross-investment and employment—such as millions of Americans working for European companies—further underscores the depth of this partnership.

The speech also warns of significant risks should trade tensions escalate, including the potential for a one percentage point reduction in US GDP growth and a comparable rise in inflation, with spillover effects into Europe. Recent tariff threats and unpredictability have already triggered sharp movements in financial markets, raising the threat of financial instability. The Governor cautions that a trade war would ultimately harm both regions, compounding existing economic challenges instead of solving them.

Looking forward, the Governor advocates for renewed dialogue, using a temporary pause in tariff increases to pursue meaningful negotiations—such as the proposal for zero tariffs on industrial goods. He encourages Europe to seize this moment to strengthen its own economic capabilities through deeper market integration, increased investment in innovation, and a more agile regulatory environment. Finally, the call for "pragmatic multilateralism" envisions Europe and the US working together on shared challenges in financial stability, technology, and climate, while preserving the institutions and freedoms that have underpinned their prosperity.

This appraisal emphasizes that open dialogue, economic cooperation, and shared values are essential not only for transatlantic relations but also for the broader stability and growth of the global economy.